TCS has reduced variable compensation for senior positions for the July to September quarter due to sluggish demand.

Numerous employees at Tata Consultancy Services (TCS) have experienced reductions in their variable pay for the July-September quarter, even though they have complied with the company's work-from-office policies. This adjustment comes amid ongoing uncertainties in business demand, as reported by sources familiar with the situation.

According to reports, while certain employees received only approximately 20-40 percent of their quarterly variable pay, others received nothing at all. This is a significant decrease compared to the 70 percent payout provided in the preceding quarter.

In addition to mandatory office attendance, the variable payout for TCS is also influenced by the performance of individual business units. This situation highlights the persistent challenges in demand and the macroeconomic uncertainties that have contributed to the modest single-digit growth observed among Tier-I IT services firms as of the second quarter.

In Q2FY25, TCS achieved a year-on-year revenue growth of 5.5 percent in constant currency (CC) terms, amounting to Rs 64,259 crore. The net profit for the period was reported at Rs 11,909 crore.

In response to Moneycontrol's comprehensive inquiries, a spokesperson for TCS stated, "For the second quarter of FY25, we have disbursed the full 100% of the Quarterly Variable Allowance (QVA) to junior grades throughout the organization. For all other grades, the QVA is contingent upon the business performance of their respective units. This approach aligns with our established practices across all quarters."

In April 2024, TCS revised its attendance policy, mandating a minimum of 85 percent in-office attendance for employees to qualify for full quarterly variable pay. Persistent failure to meet this requirement may result in disciplinary measures.

Employees who maintain an attendance rate of 75 to 85 percent will receive 75 percent of their variable pay, while those with attendance between 60 and 75 percent will be entitled to only 50 percent. Employees with attendance below 60 percent will not qualify for the quarterly bonus.

Subsequently, in July, TCS Chief HR Officer Milind Lakkad reported that approximately 70 percent of employees had returned to the office, emphasizing that this was a temporary arrangement.

The largest software exporter in the country had previously indicated that nearly 40 percent of its current workforce had been hired during the Covid pandemic and had never worked in the office environment.