Tata Consultancy Services (TCS) has once again reduced the variable pay for its senior employees, marking the third consecutive quarter of such cuts. According to a report by Moneycontrol, the company has confirmed that it has paid out 100% of the Quarterly Variable Allowance (QVA) to 70% of its employees. However, for the remaining 30%, the variable pay is tied to the performance of their respective teams and business units.
In the past, TCS typically rolled out salary hikes and variable pay adjustments in the first quarter of the financial year, with employees receiving their appraised salaries by the second quarter along with arrears. However, TCS deferred its appraisals this year, citing the uncertain global economic environment, particularly the ongoing tariff war. During the April earnings call, Milind Lakkad, TCS's Chief HR Officer, mentioned that pay hikes would be decided later in the year, depending on business performance.
TCS has been reducing the variable pay for its senior employees since the September 2024 quarter. The reductions began after the company introduced a new attendance policy in April 2024. This policy links the variable pay to office attendance: employees who attend office less than 60% of the time do not receive any variable pay. Employees with 60-75% attendance receive 50% of the variable pay, and those with 75-80% attendance get 75%. Only employees with over 85% office attendance are eligible for the full 100% of the variable pay component.
This shift in compensation practices, including the introduction of the new attendance policy, reflects the company's effort to align its performance incentives with office presence and overall business results, although it has led to discontent among some employees, particularly in the senior ranks.
