India's largest IT employer, Tata Consultancy Services (TCS), handed out annual salary increments this week, but for thousands of its nearly six lakh employees, the numbers on paper tell a very different story from what is actually landing in their bank accounts.
According to a report by Mint, a simultaneous restructuring of pay components and a variable pay policy directly linked to office attendance have triggered widespread employee discontent.
Employees who reviewed the documents are reported to have said the company has shifted the work-from-office-linked variable component to a new monthly “performance pay” component that is tied to attendance and deployment metrics.
The Hike Breakdown
Mint reported that Tata Consultancy Services rolled out average salary hikes of 5–8% for FY26, returning to its regular annual appraisal cycle after macroeconomic pressures had caused delays in the previous fiscal year.
Top-rated performers in the premium 'A+' band got double-digit increments touching 10–13%, while those in lower performance bands received adjustments hovering between 2% and 3%.
Employees in the A band reported increments largely between 5% and 9%. Staff in the B band reported hikes of around 1% to 3.5%, while many in the C band said salary revisions were either marginal or negative.
The return to the regular appraisal cycle was itself seen as a positive signal as TCS had delayed revisions the previous year citing global economic uncertainty.
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Why Take-Home Is Actually Falling
Here is where it gets complicated. A hike on paper does not automatically mean more money in hand, which is what employees are discovering.
TCS completed a full restructuring of compensation frameworks for all India-based staff, altering how components like gratuity and retirement benefits are displayed in CTC calculations, as part of compliance with India's incoming Labour Codes.
Several employees said monthly variable pay had either reduced significantly or shifted to quarterly or annual payout formats — directly affecting what they receive each month.
Some employees also claimed gratuity was no longer reflected in displayed CTC calculations, which they said could hurt salary negotiations when switching jobs, Mint reported.
The Attendance–Variable Pay Connection — Explained
This is the most contentious part of TCS's new pay structure.
TCS's variable pay has two parts: monthly performance pay, and performance bonus, which was paid quarterly earlier, might now be paid on an annual basis, and is no longer linked with office attendance.
Both fall within the variable component. Any cut to either directly reduces monthly take-home, independent of the annual hike.
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TCS revised its Quarterly Variable Allowance (QVA) policy starting Q2 FY25, linking payouts directly to in-office attendance.
Additionally, Mint reported that TCS has instructed managers to place more employees in the lowest performance category — Band D — with the HR unit pushing managers to assign around 5% of the workforce, over 29,000 staff, to that band. One executive told Mint that many of those laid off last year were employees who had previously received a D-band rating.
Employees placed in Band D face salary cuts or potential exit, compounding the anxiety around the current appraisal cycle.
What TCS Says
A TCS spokesperson confirmed to Mint that the increments were in line with the commitment made during the Q4 earnings call.
"The revised salary structure that the employees have received are guided by three key principles that include compliance with the new labour codes, standardisation of wage structures across our India workforce, and protection of employees' take-home salary, while allowing flexibility for tax efficiency," the spokesperson said.
On the attendance linkage, the company acknowledged it remains in place, "with some rationalisation which is beneficial for the employees."
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