India’s largest IT firm Tata Consultancy Services (TCS) has cut variable pay for employees for the third consecutive quarter (January-March 2025), raising concerns amid a worsening economic situation. Reports suggest that employees received only 20-30% of their
monthly variable allowance (QVA), with the reduction ranging up to 60-80%. This follows similar cuts in the previous two quarters, where payouts were also reduced, reportedly linked to factors such as office attendance and business unit performance
However, TCS refuted claims of widespread cuts, saying 70% of its 607,979 employees got 100% of their variable pay, while others got payments based on performance metrics. The
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Pkcompany’s policy, which is further extended to 2024, links QVA entitlement to 85% of the office, with non-compliance likely to lead to action.
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The cuts come at a time when TCS has reported a 1.68% drop in its profit to ₹12,224 crore in the fourth quarter and deferred annual pay raises to April 2025, citing tariff tensions and
macroeconomic challenges. Despite these challenges, TCS reported a 5.3% revenue growth for the fourth quarter to ₹64,479 crore and plans to hire 42,000 freshers in FY26. And further tax hikes may be expected
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Why It Matters: Variable pay accounts for 15-20% of employees’ total compensation, and repeated cuts could dampen morale and lead to attrition, which has already risen by 13.3% in the fourth quarter. The broader IT sector is likely to face similar pressures as companies cut costs and deal with hardship.
What’s next?: TCS plans to review salaries later in 2025, when the economy improves. For now, employees are bracing for a tighter budget while the company prioritises financial prudence.
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