Tata Consultancy Services (TCS), India’s largest software exporter, is facing scrutiny as it has reduced the quarterly variable pay (QVA) for senior employees for the second consecutive quarter, even as these employees adhered to the company’s work-from-office norms. This move reflects the company's broader strategy to tie compensation more closely to performance metrics, but it also highlights significant disparities between senior and junior staff pay.
During the July-September quarter, many senior employees received only about 20-40 percent of their quarterly variable pay, with some even receiving nothing at all. This marked a stark decline compared to Q1 FY25, when payouts approached 70 percent. One anonymous employee disclosed to Moneycontrol, "I was expecting ₹50,000-₹55,000 in QVA but instead got half last quarter and even less this quarter." Many employees are understandably concerned about the drop-off, especially since their efforts to comply with corporate policies went unrewarded.
Notably, junior employees seemed to fare much differently—approximately 70 percent received nearly 100 percent of their QVA. This discrepancy has raised questions about TCS’s new compensation structure, which now links payouts to the performance of specific business units rather than rewarding seniority or overall company performance.
When contacted, TCS opted not to comment on these speculations. This lack of transparency has left many employees feeling uncertain about their financial future and the company’s direction.
A significant factor influencing variable pay at TCS is its attendance policy implemented last year. Employees now must meet specific attendance thresholds to qualify for full pay. To receive 100 percent of the quarterly variable pay, employees are required to have at least 85 percent attendance. Those who attend between 75-85 percent are eligible for 75 percent of their variable pay, and those attending between 60-75 percent can receive 50 percent. Employees with attendance below 60 percent are not eligible for any quarterly bonus, with repeated non-compliance potentially leading to disciplinary action.
Despite the cuts to variable pay, TCS has been proactive compared to its peers when it concerns salary increments. The company commenced its wage hike process earlier this year, starting back in April 2024, whereas rivals like Infosys, HCLTech, and LTIMindtree postponed their increments until Q3 or later.
Alongside the wage hikes, TCS announced over 25,000 promotions during the third quarter, representing nearly 20 percent of its workforce, which has surpassed 110,000 total promotions for the fiscal year. Nevertheless, TCS has also seen its headcount decrease by 5,370 employees this quarter, reversing the growth trend established over the prior two quarters. This shift has raised eyebrows among industry observers.
Looking to the future, TCS appears optimistic, with executives expressing confidence about their deal pipeline—reportedly worth over $10.2 billion—projected for the upcoming quarters. This number indicates strong demand, particularly during what is typically considered the company’s weaker seasons.
Overall, TCS is at a crossroads, balancing employee satisfaction and engagement with financial prudence. The company’s decisions to cut variable pay for senior staff could either provoke unrest within the workforce or serve as part of a strategic pivot aligning compensation with performance outcomes. The coming months will likely test TCS’s ability to navigate this tightrope effectively.