Tata Consultancy Services (TCS) has cut the variable pay of its senior employees for the January-March quarter, according to a Moneycontrol report. This marks the third quarter in a row that the country’s largest software exporter has reduced variable pay for some employees.
The report quoted a TCS employee who said, “For senior employees, variable pay forms 15-20% of the CTC (cost to company). They (the company) have been deducting the QVA (quarterly variable allowances) for over a year now. In the last quarter, I got about 20% of my variable pay out”.
The employee added, “The junior-level employees either have no variable component in their salary or the percentage and corresponding amount is quite small.”
The company, however, denied the report and said: “We have paid out 100% QVA (Quarterly Variable Allowance) to over 70% of 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.”
TCS had first reduced the variable pay of senior staff for the July-September 2024 quarter after introducing a new policy that linked the payout to office attendance. The same continued in the October-December quarter, with some employees receiving only 20-40% of their QVA, even though they followed the work-from-office rule.
The new variable pay policy came into effect in April 2024. Under this rule, employees who attend the office less than 60% of the time are not eligible for any variable pay. Those with 60% to 75% attendance get 50%, while those attending between 75% and 85% receive 75%. Only employees who are in the office more than 85% of the time get their full variable pay.
Last month, TCS announced that it would delay the annual salary increments for its employees, which were scheduled to begin in April 2025. This was due to uncertainty in the global economy and worries about tariffs.
During the company’s post-earnings press conference in Mumbai, Milind Lakkad, chief human resources officer, had said, “Because of the uncertain environment, we will decide during the year on wage hikes. It can be at any time, depending on business.”
He also said, “We will take a call on the timing and the quantum of wage hikes in the coming months.”
TCS usually announces salary revisions in the first quarter of the financial year, with revised salaries paid in the second quarter along with arrears. This year, however, the company has delayed the decision. Lakkad did not specify the expected size of the hike but said it would depend on how the business situation develops over the next few months.
Despite the delay in wage hikes, Lakkad confirmed that TCS would continue investing in its employees, especially for training. “There will be no reduction in the investments towards training, whether for trainees, lateral hires, or existing employees,” he said.
TCS CEO and MD K Krithivasan noted that there were some early signs of recovery in discretionary spending during the third quarter, but this slowed down again in the fourth quarter due to continuing global uncertainty. “Since mid-February, some projects have begun ramping down, though we have not seen any large-scale cancellations,” Krithivasan said.
During the January-March quarter, TCS added 625 employees, reversing a drop of 5,370 employees in the previous quarter. The company had a total of 607,979 employees at the end of March 2025, which is an increase of 6,433 employees for the full financial year. In FY25, TCS promoted 110,000 employees, with promotions spread fairly across all four quarters.
Lakkad also said the fresher hiring programme is on track. “Our trainee on-boarding in FY25 was 42,000 as planned, and next year too, we expect to on-board as many, if not more,” he said.
Attrition increased slightly to 13.3% in the March quarter, compared to 13% in the October–December period and 12.5% in the same quarter last year. This marks the third consecutive quarter of rising attrition. However, Lakkad said the quarterly annualised attrition rate had actually fallen by 130 basis points. Attrition had peaked at 21.5% in the second quarter of FY23 before it began to decline.