Tata Consultancy Services (TCS), India’s largest software exporter, has announced a reduction in variable pay for senior employees for the second consecutive quarter.
This decision comes despite senior employees adhering to the company’s work-from-office norms.
Responding to queries, a TCS spokesperson stated, “We don’t comment on speculation.”
The company has not provided a detailed explanation for the variable pay cuts but emphasized that the payouts are based on standard practices.
TCS Variable Pay Reduction Details: Updated Attendance Policy
In the previous July-September quarter, some senior employees received only about 20-40 percent of their quarterly variable allowances (QVA), while others received no variable pay at all.
This is a significant decrease compared to the nearly 70 percent QVA payout in the first quarter of FY25.
For example, one employee reported receiving Rs 21,000 last quarter and only Rs 16,000 this quarter, despite expecting Rs 54,000.
TCS has linked variable pay to the performance of individual business units.
While junior staff received 100 percent of their QVA, senior employees’ payouts depended on their unit’s performance.
This has led to internal confusion and concerns among senior employees.
In April 2024, TCS updated its attendance policy, requiring employees to achieve at least 85 percent office attendance to qualify for their full variable pay.
Employees with 75-85 percent attendance receive 75 percent of their variable pay, while those with 60-75 percent attendance receive 50 percent.
Employees attending less than 60 percent of the time do not qualify for the quarterly bonus.
Financial Performance, Employee Promotions and Hiring
Despite the variable pay cuts, TCS reported a net profit of Rs 11,909 crore in Q2 FY25, a 5 percent increase year-on-year.
The company’s revenue for the quarter stood at Rs 64,259 crore, registering a growth of 7.6 percent year-on-year.
TCS has been better positioned than its peers, including Infosys and HCLTech, in terms of rolling out timely salary increments.
In Q3 FY25, TCS promoted over 25,000 associates, bringing the total promotions for the fiscal year to nearly 20 percent, or over 110,000, of its workforce.
The company continues to invest in employee upskilling and overall well-being. TCS also plans to onboard a higher number of campus hires next year.
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