Senior staff at Tata Consultancy Services (TCS) will not receive quarterly variable pay for the September quarter, marking the first time in at least two years that bonuses have been withheld for this group, according to an internal memo seen by Reuters and reported by livemint.com. The decision affects associates in the C3A grade and above, typically employees with 7-10 years of experience up to senior management levels.
The memo, authored by Sudeep Kunnumal, TCS's chief human resource officer, stated that the company’s performance for the quarter fell short of internal targets, prompting the decision to withhold the quarterly variable allowance (QVA) for senior staff. Junior-level employees will still receive 100% of their eligible variable pay. Employees familiar with the matter noted that TCS usually awards between 50% and 100% of variable pay, making this a notable departure from recent practice.
This move comes amid TCS reporting its weakest sequential revenue growth in three years for the September quarter, reflecting ongoing pressure on traditional IT services demand. Despite this, the company’s AI-related revenue rose nearly 20%, which was positively received by investors, pushing the stock up by as much as 6.2%. The broader Indian IT sector, valued at $315 billion, is also navigating uncertainties linked to international policies affecting the industry.
TCS’s internal memo and the company’s quarterly performance figures highlight the challenges faced by India’s largest IT firm during this period. The company’s stock movement following the AI revenue increase was noted on the Friday after the quarter ended, underscoring investor focus on emerging technology segments within traditional IT services.