TCS cuts bonus pay by 40% on tepid business demand
Tata Consultancy Services (TCS), India's largest IT services company, has slashed the quarterly bonuses of its senior staff, as per a report by Moneycontrol. The cut ranges between 20% and 40%, with some employees not even getting a bonus. The decision comes despite the employees following the company's strict return-to-office policies. The move comes after a 70% variable payout in the last quarter.
Junior staff unaffected by bonus cuts
Notably, the bonus cuts have not impacted all TCS employees equally. Junior staffers have been paid their full quarterly variable allowance without any cuts. A TCS spokesperson explained the differential treatment, saying, "For Q2FY25 we have paid out 100% QVA (Quarterly Variable Allowance) to junior grades across the company." The spokesperson added that for other grades, the QVA depends on their unit's business performance.
TCS's bonus determination and return-to-office push
TCS has been calculating bonuses based on a combination of office attendance and the performance of individual business units. The company has been actively encouraging employees to return to the office, warning that consistent non-compliance with attendance policies could lead to disciplinary action. In July, TCS reported that 70% of its workforce had returned to the office, a figure that is increasing weekly.
TCS's revised variable pay policy and attendance slabs
In April 2024, TCS announced a new variable pay policy considering employees' office attendance. The revised policy set four attendance slabs determining variable pay for employees. Those working from the office less than 60% of the time won't get any variable pay for the quarter. Employees with 60-75% office attendance will get 50% of the variable pay, those attending office 75-85% get 75% of it. Only those with compliance levels above 85%, will get full variable pay for that quarter.
TCS's Q2 performance and future outlook
TCS also reported a slower revenue growth in the second quarter, mirroring trends across the sector. However, the company expects business to improve by the fourth quarter. TCS reported a 5.5% year-on-year revenue growth in constant currency terms in Q2. "We expect the headwinds to stabilize in Q3 and return to growth in Q4," the company told analysts last month.
