Tata Consultancy Services (TCS), India’s largest IT services firm, has announced a 100% payout of Quarterly Variable Allowance (QVA) to over 70% of its workforce for the April–June quarter (Q1 FY26).
This marks the second consecutive quarter of full QVA disbursement, reinforcing the company’s commitment to employee recognition despite a challenging macroeconomic environment.
According to an internal communication from Chief Human Resources Officer Milind Lakkad, all employees up to the C2 grade will receive full QVA.
For those in C3 and above grades, payouts will vary based on the performance of their respective business units.
TCS Financial Performance
TCS reported a 6% YoY increase in net profit, reaching ₹12,760 crore in Q1 FY26, up from ₹12,040 crore in Q1 FY25.
However, revenue growth remained subdued, rising just 1.3% YoY to ₹63,437 crore.
In constant currency terms, revenue declined 3.1% YoY, and 1.6% sequentially, marking the slowest growth since Q1 FY21.
CEO K Krithivasan attributed the slowdown to delays in client decision-making, geopolitical tensions, and weak discretionary tech spending, which intensified during the quarter.
TCS Headcount and Attrition: Growth Amid Uncertainty
Despite the sluggish business climate, TCS added 5,060 employees in Q1 FY26, bringing its total workforce to nearly 613,000, the highest among Indian IT firms.
This builds on the 625 net additions made in Q4 FY25.
Attrition stood at 13.8%, reflecting a stable trend compared to previous quarters.
The company continues to invest in talent acquisition and retention, even as utilisation levels dipped due to upfront hiring.
Wage Hike Status: Still on Hold
While quarterly variable pay has been disbursed on schedule, annual salary hikes remain deferred.
CFO Samir Seksaria acknowledged that delivering wage hikes is a top priority, though no timeline has been provided.
He noted that such hikes typically impact operating margins by 150 basis points, and that internal efficiencies will be key to managing costs going forward.
Optimism Tempered by Market Volatility
TCS remains cautiously optimistic about the rest of FY26.
Krithivasan stated that discretionary tech investments—a key growth driver—are expected to recover once macroeconomic clarity emerges.
The company’s continued commitment to employee rewards, even amid revenue pressure, signals a long-term focus on workforce stability and morale.
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