TCS cuts variable pay of senior staff for July-September quarter: What the company has to say

Tata Consultancy Services (TCS) has reduced variable pay for some employees in the July-September quarter, a report has said, adding that the cuts have hit even those who have complied with the company’s work-from-office policy.
Citing sources close to the matter, Moneycontrol reported that while some employees received only 20-40% of their quarterly variable pay, others received no variable pay at all. This marks a significant drop from the 70% payout in the previous quarter.
In April 2024, TCS revised its attendance policy, mandating a minimum of 85% office attendance for employees to receive their full variable pay. Employees with lower attendance rates receive a reduced percentage of their variable pay, with those below 60% ineligible for the bonus.

How TCS pays variables to staff

TCS links variable pay to office attendance as well as it also depends on the performance of individual business units. The report also said that the recent cuts reflect the challenging demand environment and economic uncertainties that have led to slower growth for major IT services companies in the second quarter.
In Q2, India’s largest IT services company reported a 5.5% year-on-year revenue growth in constant currency terms.
“We expect the headwinds to stabilise in Q3 and return to growth in Q4,” the company told analysts in its post-earnings call last month.

What the company has to say

A TCS spokesperson clarified that junior-level employees received 100% of their quarterly variable allowance (QVA). However, for other grades, the QVA is based on their unit’s business performance, consistent with the company’s usual practice.
“For Q2FY25 we have paid out 100% QVA to junior grades across the company. For all other grades, the QVA depends on their unit’s business performance. This is in line with our standard practice across quarters,” a TCS spokesperson was quoted as saying.