Tata Consultancy Services (TCS), India’s largest IT services company, has paid out 100% of the Quarterly Variable Allowance (QVA) to over 70% of its employees for the January–March 2025 quarter.
The company stated that variable payouts for other employees were based on individual business unit performance, maintaining its standard practice across quarters.
However, reports suggest that senior employees continue to face reduced variable payouts, with some receiving as little as 20%. This marks the third consecutive quarter where the firm has cut variable pay for senior staff.
A TCS employee told media that variable pay constitutes 15–20% of senior employees’ total compensation. Despite following work-from-office norms, they have been getting reduced QVA for over a year.
The company’s revised policy, introduced in April 2024, links variable pay to office attendance—only employees with over 85% attendance are eligible for full QVA.
Senior Executives See Pay Cuts Amid Global Challenges
TCS move to trim senior-level variable pay comes against the backdrop of a challenging business climate marked by global economic uncertainty and tariff wars.
In a press briefing following Q4 results, Chief Human Resources Officer Milind Lakkad said the company has deferred its annual wage hikes that were originally planned for April 2025. “We will take a call on the timing and quantum of wage hikes during the year, depending on business conditions,” Lakkad added.
The delay in annual salary increments, typically announced in Q1 and paid in Q2 with arrears, reflects TCS’s cautious stance in response to the market headwinds.
While the company has not confirmed the scale of upcoming hikes, it has affirmed that employee investments, particularly in training and upskilling, will not be affected.
Hiring Stabilises as Employee Headcount Rises
Despite cost-cutting at the senior level, TCS continues to expand its workforce.
In Q4FY25, the company added 625 employees, reversing the previous quarter’s headcount decline of 5,370. At the end of March 2025, TCS had 607,979 employees—an increase of 6,433 for the fiscal year.
The company also promoted 110,000 employees during FY25, evenly across all quarters.
Lakkad reiterated that the company’s fresher hiring programme remains on track, with 42,000 new graduates onboarded in FY25.
He expects the same or higher intake for FY26. “We are committed to long-term investment in people,” he said, underscoring the firm’s focus on building talent internally even in uncertain times.
Slight Rise in Attrition as Business Volatility Persists
TCS reported a modest increase in attrition, which stood at 13.3% for Q4FY25, up from 13% in the previous quarter and 12.5% a year ago.
This marks the third consecutive quarter of rising attrition. However, Lakkad clarified that the quarterly annualised attrition rate had dropped by 130 basis points. Attrition had peaked at 21.5% in Q2FY23 before starting a downward trend.
On the business front, CEO and MD K Krithivasan noted that discretionary spending showed signs of recovery in Q3 but weakened again in Q4 due to continued global uncertainty.
Despite some project ramp-downs since mid-February, there were no significant cancellations. For FY25, TCS posted a revenue of $30.18 billion, reflecting a 3.8% year-on-year growth in dollar terms.
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