Tata Consultancy Services (TCS), India’s largest software exporter, has reduced the quarterly variable pay (QVA) for senior employees for the second consecutive quarter, despite their adherence to the company’s work from office norms. This marks a continued trend from the previous quarter when similar cuts were made. Senior employees received significantly lower payouts compared to the earlier part of the year.
Key Highlights
- Reduced Variable Pay: In the July-September quarter, several senior employees received only about 20-40 percent of their quarterly variable pay, with some even receiving zero. This is a stark contrast to the Q1FY25, where payouts were nearly 70 percent. One employee revealed that their QVA was halved in the previous quarter and further reduced to just a quarter of what was expected in the current quarter.
- Employee Feedback: According to sources close to the company, approximately 70 percent of junior staff received nearly 100 percent of their QVA. However, senior employees’ payouts were linked to the business unit-wise performances, with those in the lower ranks being better compensated.
- TCS Response: A TCS spokesperson declined to comment on these speculations when approached by Moneycontrol.
Work from Office Attendance Policy Linked to Variable Pay
- Attendance Requirements: Last year, TCS introduced a policy linking work from office attendance to variable pay. Employees with 85 percent office attendance were eligible for the full quarterly variable pay. Those with 75-85 percent attendance would receive 75 percent, and employees attending 60-75 percent of the time were eligible for only 50 percent of their variable pay.
- Consequences of Non-Compliance: Employees with less than 60 percent office attendance were not eligible for any quarterly bonus, and consistent non-compliance could lead to disciplinary action as per an internal memo.
Delayed Wage Hikes and Promotions
- Wage Hikes: TCS has been quicker in rolling out salary increments compared to its peers. The company began its wage hike cycle in April 2024, whereas Infosys, HCLTech, and LTIMindtree delayed theirs until Q3 and beyond.
- Promotions: In Q3, TCS promoted over 25,000 employees, bringing the total number of promotions in the fiscal year to more than 110,000 employees, or nearly 20 percent of its workforce.
- Headcount Changes: Despite promotions, TCS’s headcount decreased by 5,370 employees in Q3, reversing the growth trend seen in the previous two quarters.
Looking Ahead
TCS remains optimistic about the future with a strong deal pipeline worth over $10.2 billion for the upcoming quarters, despite challenges in a traditionally weaker quarter. The company continues to focus on employee development, including upskilling and campus hiring for the next year.
