TCS Rolls Out Quarterly Variable Pay Amid Uncertainty Over Wage Hike

Tata Consultancy Services (TCS) has rolled out quarterly variable pay for the first quarter of the financial year 2025-26 (FY26), even as its over 6-lakh-strong workforce awaits clarity on annual wage hikes.

"In Q1FY26, we have paid out 100% QVA (Quarterly Variable Allowance) to over 70% of the company. For all other grades, the QVA depends on their unit’s business performance. This is in line with our standard practice across quarters," a TCS spokesperson told Outlook Business via email.

At TCS, the grade structure begins with trainees at level Y, followed by systems engineers at C1, then C2, C3 (A & B), C4, C5, and senior leadership roles including CXOs. Employees in the C3 band and above are generally considered part of the senior category.

Earlier, it was reported that Chief Human Resources Officer Milind Lakkad had informed employees via email that all staff up to the C2 grade (or equivalent) under the QVA plan would receive 100% of their variable pay, while payouts for C3 and above would vary depending on business performance.

In the previous quarter as well, TCS paid 100% QVA to 70% of its employees, although some reports claimed that a portion of the payout had been withheld.

While TCS continues to pay variable components on time each quarter, the company has yet to make a decision on annual salary hikes, citing a weak macroeconomic environment. This uncertainty has contributed to a decline in revenue in dollar terms for three consecutive quarters.

In the quarter ended June, the IT giant added 5,060 employees, bringing its total headcount to nearly 613,000.

“We’ve seen delays in decision-making and project starts. This trend, particularly around discretionary investments, has continued and even intensified this quarter. Global businesses have also faced disruptions due to geopolitical conflicts, economic uncertainty, and supply chain issues,” CEO K Krithivasan said last week, commenting on the Q1 results.

Krithivasan added that while discretionary spending remains muted across sectors, it is expected to pick up once the macroeconomic environment stabilises.