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TCS to roll out 100% variable pay to junior employees for Q3FY23

For senior employees, the individual variable payout is based on business unit performance.

January 11, 2023 / 01:17 PM IST

Tata Consultancy Services (TCS) will give full variable pay to all junior-level employees for the third quarter, according to an email from the Chief Human Resources Officer, Milind Lakkad. This is despite a challenging business environment, where TCS had fewer deal wins, but still managed to beat expectations on the revenue front.

“A decision has been taken to pay 100% of the Quarterly Variable Allowance (QVA) for all employees up to C2 or equivalent grades covered under this plan,” said the email accessed by Moneycontrol. These include trainees and IT analysts.

For mid and senior-level employees, the individual variable payout is based on business unit performance. “The individual pay-out for C3A or equivalent grades and above (as applicable) may vary, depending on the business unit performance,” a note by Lakkad said. C3A and above grades are assistant consultant, associate consultant and consultant, senior and principal consultant.

TCS paid out 100 percent of variable pay to junior-level employees during the previous quarter as well.

TCS did not respond to Moneycontrol's queries.

During the quarter, the company reported a net reduction in headcount, with 2,197 fewer employees on its payroll than the previous quarter. It also saw its net headcount reduce sequentially for the first time in ten quarters, the last time being in the first quarter of FY21. As of December 31, 2022, the company's headcount was 6,13,974.

Also read: Why has TCS’ net headcount reduced in Q3FY23? CEO Rajesh Gopinathan explains

Chief Financial Officer Samir Seksaria told reporters after the earnings that supply-side challenges are abating, and the elevated expectations of salaries along with backfilling expenses coming down was helping on the margin front.

In the call with analysts, CEO Rajesh Gopinathan said that the company invested in capacity building in 2021 to "bypass the industry's hire-from-each-other attrition cycle," when asked about the headcount reduction.

He said that the company “focused on hiring at the entry level and invested in training and cross-training our resources.”

Also read: Level of tolerance between a disaster quarter and a great quarter is 50 basis points: TCS CEO Rajesh Gopinathan

“That investment has hit our productive capacity and stood us in the stead. So, the incremental hiring that we saw this year should be seen in the context of what we've done in the last year also. And overall, we are very comfortable with where we are with our net headcount,” he said.
Haripriya Suresh
Debangana Ghosh
Debangana Ghosh