Key Points
- TCS cut variable pay for employees in the July-September quarter, with some getting just 20-40% or no payout.
- Variable pay is based on both attendance and the performance of individual business units.
- The company’s Q2 FY25 growth was 5.5%, but profits and margins missed expectations.
- TCS expects demand to pick up in Q4, a traditionally stronger quarter after a weak Q3.
- The attendance policy requires 85% office presence for full variable pay, with penalties for missing this target.
Looma News
Many employees at Tata Consultancy Services (TCS) saw a big drop in their variable pay for the July-September quarter. Even those who met the company’s in-office attendance requirements received only 20-40% of their usual quarterly bonus, while some got nothing. This is a sharp decline from the 70% payout in the previous quarter. The company’s decision to lower payouts reflects the ongoing uncertainty in business demand and economic conditions, which have affected the growth of India’s largest IT services firm.
At TCS, variable pay is linked to two main factors: attendance at the office and the performance of individual business units. In April 2024, TCS updated its attendance policy, requiring employees to be in the office at least 85% of the time to qualify for full variable pay. Employees who attend between 75-85% of the time will receive 75% of their bonus, while those with 60-75% attendance will get 50%. Anyone attending less than 60% of the time won’t be eligible for a bonus. This policy is part of TCS’ return-to-office strategy, which aims to address changes in the workforce post-pandemic.
TCS’ results for Q2 FY25 showed a 5.5% year-on-year growth in revenue, reaching Rs 64,259 crore. However, the company’s profit and margins fell short of market expectations. Despite the disappointing quarter, TCS remains optimistic about a recovery, forecasting growth in Q4 FY25. Management noted that the third quarter is usually weaker due to furloughs in regions like the US and Europe, where clients often pause outsourced services during the holiday season.
In addition, TCS has faced delays in closing deals, with longer timelines rather than changes in contract durations. The company is hopeful that demand will improve by the end of the fiscal year.
