Tata Consultancy Services (TCS), India's largest IT services company, has withheld quarterly variable pay for senior employees after falling short of its internal performance targets, while junior-level staff will receive their full eligible payout, Reuters reported, citing an internal memo.
The decision marks the first time in at least two years that the company has explicitly withheld the entire quarterly variable allowance for a section of its workforce, according to employees cited by Reuters.
In the memo, TCS Chief Human Resources Officer Sudeep Kunnumal informed employees that those in the C3A grade and above would not receive quarterly variable allowance (QVA) for the latest quarter.
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"For associates C3A grade and above, there will be no QVA (quarterly variable allowance) this quarter. This decision was taken after careful consideration as our performance for the quarter fell short of internal targets," Kunnumal said in the memo seen by Reuters.
Employees in the C3A category and above typically have seven to 10 years of experience or more, with the grades extending to senior management positions. In contrast, junior-level employees will receive 100% of their eligible variable pay, the memo added. Reuters reported. that TCS did not respond to emails seeking comment.
Employees who spoke to Reuters on condition of anonymity said the company typically awards between 50% and 100% of variable pay. The latest decision stands out because it explicitly rules out any quarterly bonus for the affected grades, they added.
The decision comes as TCS reported its weakest sequential revenue growth for a September quarter in three years, highlighting continued pressure on demand for traditional IT services.
While the company has seen momentum in artificial intelligence-related business, with AI revenue rising nearly 20%, the growth has not fully offset the broader challenges facing its traditional services business.
Investors, however, responded positively to the AI-related revenue momentum. TCS shares rose as much as 6.2% on Friday, Reuters reported.
The development comes at a challenging time for India's $315 billion IT industry, which is navigating subdued client spending, changing technology priorities and uncertainty over US immigration policies.
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On Thursday, the Trump administration suspended major IT outsourcing companies, including TCS, Infosys and HCLTech, from a key green-card programme. The move widened a crackdown that the administration has said is aimed at addressing fraud and protecting American workers.
The policy adds another layer of uncertainty for Indian IT services companies, many of which depend on the US market for a substantial share of their business.
For TCS employees, the decision to withhold quarterly variable pay for senior staff underscores how pressure on business performance can translate into compensation decisions, even as the company looks to AI-related services to support future growth.
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