TCS slashes variable pay for senior employees for second quarter in a row

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India’s largest software exporter Tata Consultancy Services (TCS) has cut quarterly variable for senior employees for the second consecutive quarter despite them adhering to the company’s work from office norms, sources in the know told Moneycontrol.

In the previous July-September quarter too, some employees had got only about 20-40 percent of their quarterly variable allowances (QVA) while others had even got zero percent of it. This was very less as compared to the QVA given out in Q1FY25 which was nearly 70 percent.

“I was supposed to get Rs 50,000- 55,000 in QVA, but ended up getting half last quarter and this quarter it was even less, at a fourth” an employee seeking anonymity told Moneycontrol.

Another source close to the company said that in Q3, almost 100 percent of the QVA was paid out to 70 percent of the employees that mostly consisted of the junior level staff while the remaining 30 percent of senior employees received their pay outs based on the business unit-wise performances in the company.

Responding to emailed queries sent by Moneycontrol, a TCS spokesperson said, “We don't comment on speculation.”

Last year, TCS had linked work from office attendance to variable pay out of employees. The HR policy was updated expecting minimum 85 percent attendance of employees in office for them to receive full quarterly variable pay. Also, consistent non-compliance of this could lead to disciplinary actions being taken.

Employees with 75-85 percent work from office attendance will receive 75 percent of their variable pay while those with 60-75 percent attendance will only get 50 percent of their variable pay. And those with less than 60 percent attendance won’t be eligible for the quarterly bonus, according to an internal memo.

Delayed wage hikes

On the industry front, TCS has been better positioned than its peers, including Infosys and HCLTech, in terms of rolling out timely salary increments. While TCS began its wage hike cycle in April 2024, or the first quarter, Infosys, HCLTech, and LTIMindtree delayed theirs until Q3 and beyond.

In Q3, TCS also promoted more than 25,000 employees, bringing the total promotions for the fiscal to nearly 20 percent, or over 1,10,000, of its workforce.

“We promoted over 25,000 associates this quarter, which brought the total promotions this financial year to more than 110,000. We continue to invest in employee upskilling and overall well-being. Our campus hiring for the year is going according to plan and preparations are afoot to onboard a higher number of campus hires next year," chief human resources officer Milind Lakkad had said.

However, the company’s headcount decreased by 5,370 employees in third quarter, marking a reversal after two consecutive quarters of headcount growth.

TCS continues to see demand for the upcoming quarters after reporting a strong deal pipeline of over $10.2 billion in a seasonally weak quarter.