TCS rolls out 100% variable pay for majority of the workforce

The Tata Group company awarded 100% variable pay for the second quarter of FY23 as well. The average payout for Infosys during the same quarter was 65%.

“A decision has been taken to pay 100% of the quarterly variable pay (QVA) to all employees up to C2 or equivalent grades covered under this plan. The individual payout for C3A or equivalent grades and above may vary depending on the business unit performance,” said the email from CHRO Milind Lakkad to employees. The communication was issued a day after the Q3 earnings were declared.

Designations C3 and above are employees at the assistant consultant, associate consultant, and consultant levels.

QVA is based on company performance and in the case of mid and senior employees the performance of the business unit is also a factor, Samir Seksaria, CFO, TCS had explained during an interaction with ET.

“Depending on the business unit performance, employees get 100% or even higher,” he said.

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During Q3 post earnings briefing, Seksaria had stated that the company expects to close the financial year at 25% operating margin (up 50 basis points from Q3). “. The elevated expectations of salaries and the backfilling retention expenses having come down is definitely something that is helping (margins)”, he added.During the third quarter, the company reported a fall of 2,197 employees on a sequential basis as the environment of the IT sector is facing macroeconomic challenges. The Tata Group firm’s headcount stood at 613,974 for the quarter-ended December. It is to be noted that, in the second quarter, the employee addition came in at 9,840 in July—September period— its lowest net new addition in the last nine quarters.

“You are aware that we made a significant hiring of fresh talent last year as well as the first half of this year. (We) made significant investment in talent development to make them productive and that is now paying off,” said Milind Lakkad, chief HR officer at TCS during the post earnings call.

“All of this resulted in negative headcount but it does not indicate anything about the demand. Demand is high and we are just operating it efficiently,” he said in response to the question on headcount fall.