TCS Slashes Variable Pay for Senior Staff — Tough Times at the Top

According to a media outlet, Tata Consultancy Services (TCS) has cut top staff' variable pay for the January–March quarter. The top software exporter in the nation has reduced variable pay for some employees for the third consecutive quarter.

As per a TCS employee cited in the paper, variable pay accounts for 15–25% of the CTC (cost to the company) for top personnel. For more than a year, the business has been deducting the QVA. Employees received roughly 20% of their variable payout in the most recent quarter.

Junior-level employees' pay either has no variable component at all or the percentage and associated sum are very low. Senior employees' variable pay was already reduced by the corporation for the quarters of July–September and October–December in 2024. Only 20–40% of their quarterly variable allowances (QVA) were then paid to certain employees.

Pay-out Based on the Attendance

Last year, TCS modified its variable pay policy to tie it to how frequently workers visit the office. Starting in April 2024, the new rule establishes varying compensation levels according to attendance.

Variable compensation will not be available to employees who visit the office less than 60% of the time. 50% of their variable pay will be paid to those whose attendance falls between 60% and 75%. 75% will be given to workers that show up between 75% and 85% of the time.

The rule then stated that full variable pay would only be paid to employees who attended work more than 85% of the time. TCS said last month that it would postpone staff pay increases that were supposed to start in April 2025 due to concerns about tariffs and the state of the world economy.

Milind Lakkad, Chief Human Resources Officer, stated during the business's post-Q4 earnings news conference in Mumbai last month that the company will make a decision regarding wage raises during the year due to the unpredictable environment. Depending on the business, it could happen at any time.

Reason Behind the Decision

With a total workforce of about 6.8 lakh, TCS added 625 workers between January and March and 6,433 during the whole year beginning in April 2024. The company's and the industry's performance, particularly the first quarter's decline brought on by the impact of tariffs that slowed anticipated business demand, is consistent with the lower QVA.

The IT powerhouse announced a lower-than-expected fourth quarter, with net profit dropping 1.68% year-over-year (YoY) and 1.26% sequentially to INR 12,224 crore. The quarter ended in March. At INR 64,479 crore, operating revenue increased 0.8% from quarter to quarter and 5.3% year over year.

 A significant portion of corporate demand slowed in important industries like media, manufacturing, communications, life sciences & healthcare, and consumers.