TCS Cuts Variable Pay For Senior Employees For Third Straight Quarter

Tata Consultancy Services Ltd. has cut variable pay for its senior employees for the third consecutive quarter, according to two persons aware of the matter.

The development comes as the IT industry at large has been delaying issuing variable payouts amid no significant margin growth. Variable pay is a performance-linked incentive, paid out on a quarterly basis, depending on the employee and organisation's performance in the specific quarter.

TCS has also recently delayed its wage hikes this year — which it typically issues in April every year — as the management remains undecided on the salary increment cycle amid tariff woes. The company plans to make the decision based on the evolving business environment as uncertainty looms in the sector.

The variable pay for the January to March quarter was deducted by 69%. In the third quarter, the pay was deducted by 78% and 55% was deducted in the second quarter. These pay cuts are being made for senior employees at higher grades, according to an employee who spoke on the condition of anonymity.

An employee said the cuts had been happening despite the person being "one of the top performers" in the respective vertical, adding that this was also after following all the work-from-office rules and being on a project.

TCS' employee count at the end of fiscal 2025 stood at 6,07,979, as the company added 625 employees in the fourth quarter. In the entire financial year, the company hired 42,000 freshers. Attrition rate in the fourth quarter for TCS inched up to 13.3% from 13% in the last quarter.

Amid a weak demand environment, TCS' revenue for the fourth quarter inched up marginally by 0.79% to Rs 64,479 crore and net profit fell 1.26% to Rs 12,224 crore. TCS' management had underscored that the improving market sentiment and revival of discretionary spending had not been sustained due to tariff discussions, and delays in decision-making are being seen.

Commenting on the development, a TCS spokesperson in a statement said, "The assertions in your query are incorrect. 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."

Also Read: TCS Q4 Review: Brokerages Cut EPS Estimates Over Demand Concerns Due To Global Macro Uncertainty