TCS reduces variable pay for senior staff again
What's the story
India's largest software exporter Tata Consultancy Services (TCS) has reportedly slashed the quarterly variable pay of its senior employees. This is the second consecutive quarter that the company has taken such a step. The cut was made despite the employees following the company's in-office work policy, sources familiar with the matter told Moneycontrol.
Pay cut details
Previous quarter saw significant reduction in QVA
In the last quarter (July-September), select TCS employees received only around 20-40% of their quarterly variable allowances (QVA). Others didn't receive any portion of it at all. This was a massive drop from the QVA distributed in Q1 FY25, which was nearly 70%. An anonymous employee told Moneycontrol that they were expecting ₹50,000-₹55,000 in QVA but received half last quarter and even less this quarter.
Distribution
Junior staff received full QVA, senior staff's pay varied
In Q3, almost the entire QVA was distributed to roughly 70% of TCS employees, mostly junior-level employees. The remaining 30% senior employees had their payouts based on how their respective business units performed in the company. When approached regarding these reports, a TCS spokesperson said they do not comment on speculation.
HR policy
Attendance-linked variable pay policy
In 2024, TCS revised its HR policy to associate in-office attendance with variable pay. The updated policy mandated a minimum of 85% office attendance for employees to get their full quarterly variable pay. Failure to comply could have resulted in disciplinary action. The policy also mentioned that employees with 75-85% office attendance would get 75% of their variable pay, and 60-75% would get half.
Wage hikes
TCS outperforms peers in timely salary increments
Despite cutting variable pay, TCS has beaten its rivals, including Infosys and HCLTech, in timely salary increments. The company initiated its wage hike cycle in April 2024 or the first quarter. Meanwhile, Infosys, HCLTech, and LTIMindtree delayed their increments to Q3 and beyond. TCS also promoted over 25,000 employees in Q3 alone.
Workforce changes
Headcount decreases despite promotions and strong deal pipeline
Despite promoting over 25,000 employees in Q3, TCS's total headcount fell by 5,370 employees in the same period. This marks a shift after two consecutive quarters of workforce growth. However, the firm continues to see demand for the upcoming quarters after reporting a robust deal pipeline of over $10.2 billion in a seasonally weak quarter.