Tata Consultancy Services (TCS), a leading IT company, has made a significant announcement regarding its employees. The company has declared a 100 percent quarterly variable pay for over 70 percent of its workforce for the first quarter of fiscal year 2026 (April to June 2025). This announcement comes at a time when the economic environment is not entirely favorable for IT companies.
This information was confirmed by the company's Chief Human Resources Officer (CHRO), Milind Lakkad, through an internal email sent to employees. He stated that all employees in the C2 grade or equivalent, covered under the QVA (Quarterly Variable Allowance) scheme, will receive the full variable amount.
Variable Pay Scale by Grade
TCS has a defined employee grading system based on which variable pay is disbursed. According to the grade, newly recruited trainees fall into the Y grade. System Engineers then come under the C1 grade. Above them are C2, then C3 (A and B), then C4, C5, and finally the CXO grade.
This time, the company has clarified that employees up to the C2 grade will receive the full three months' variable pay. Meanwhile, the payout for employees in C3 and above will be based on the performance of their department or business unit. Such employees may receive a partial or full amount, or face pay cuts if performance is weak.
Increment Decision Postponed, But Hiring Continues
While the company has adopted a generous approach to variable pay, the decision on annual salary increments has been postponed for the time being. Typically, TCS starts the increment process every year in April. However, this time, the company has deferred the decision until the second quarter.
The reason cited for this is economic instability and the continuous decline in the value of the dollar. According to TCS, the weakening dollar has impacted the company's revenue, due to which the increment has been postponed for some time.
However, even though the increment is on hold, the company's hiring process has not stopped. In the April-June quarter, the company hired 5,090 new people. With this, the total number of employees in the company has increased to over 6,13,000.
₹12,760 Crore Profit in the First Quarter
TCS has delivered b performance in the first quarter of fiscal year 2026. The company has recorded a net profit of ₹12,760 crore, a 6 percent increase year-on-year. This figure is significantly higher than the first quarter of the previous fiscal year.
Not only profit, but the company's revenue has also increased slightly. In April-June 2024, the company's operational revenue was ₹63,437 crore, which was ₹62,613 crore in the same quarter a year ago. This represents a growth of 1.32 percent in the company's business.
Bonus for Shareholders, ₹11 Dividend
The company has not only taken care of its employees, but has also given good news to its shareholders. Along with the quarterly results, the company has announced a dividend of ₹11 per share. This will maintain investors' confidence in the company.
TCS has consistently performed well, strengthening its stock value and investor expectations. The company says it is working towards securing more new projects in the coming months.
Increased Enthusiasm Among Employees with Variable Pay
Enthusiasm is being seen among employees after the company's variable pay decision. Especially with employees up to the C2 grade receiving 100 percent payment, it is clear that the company is appreciating the hard work of its mid and junior staff.
While many IT companies are cutting bonuses or variable pay due to recession and declining profits, TCS has set a different example. However, for senior-level employees, variable pay remains entirely performance-based.
Other Companies in the IT Sector are Watching
TCS's move is being seen as a signal for other players in the IT sector as well. In the current climate, when the sector is struggling with recession, deal delays, and international uncertainties, the country's largest IT company providing variable pay is a big message.
Many experts believe that companies like Infosys, HCL Tech, Wipro, and Tech Mahindra may also follow this path in the coming times. However, the performance and strategies of these companies will also have an impact on this.
Efforts to Maintain Employee Morale
These recent announcements from TCS also show that the company is trying to maintain the morale of its employees. Giving variable pay after postponing the increment creates a positive atmosphere among employees, which does not affect work efficiency.
