TCS Trims Q1 Variable Pay For Mid-Level & Senior Staff; Junior Employees Get Full Payout

Tata Consultancy Services has reduced quarterly variable pay for employees in mid and senior bands for the April-June quarter, even as junior staff continued to receive their full payout.

Employees in mid and senior grades received an average of 60-70 percent of their eligible variable pay for the quarter, lower than the 60-80 percent range paid out in the preceding two quarters. The latest figure, however, remains well above the 20-40 percent payouts that persisted for nearly two years before improving in FY26.

Payout decline follows recent improvement

The dip marks a pullback after TCS had raised variable payouts earlier in the year. One senior employee told Moneycontrol that their variable pay fell by 30-35 percent compared with the previous quarter, adding that they had not received a full payout in more than three years.

Margin pressure and wage hikes cited as factors

The reduction coincides with TCS' annual salary revision cycle and comes as the company deals with pressure on profitability. TCS reported an operating margin of 24 percent for the quarter, down 130 basis points sequentially.

Speaking at the company's earnings call, Chief Financial Officer Samir Seksaria said annual increments for the global workforce affected margins by 170 basis points during the quarter. He said the company partly cushioned this impact through 40 basis points of currency-related gains, along with operational efficiency measures and investments in its partnership ecosystem. Seksaria added that TCS continues to prioritise capability-building investments, including in AI, over near-term margin expansion.

Junior staff shielded from the cuts

The payout reduction has not extended to junior-level employees, who make up a large share of the company's workforce and continued to receive 100 percent of their quarterly variable pay, the report said. The approach reflects TCS' practice of tying senior-level compensation more closely to overall business performance.

Attendance-linked payout structure continues

TCS has also maintained its policy of linking variable pay to office attendance. Employees with at least 85 percent attendance qualify for the full payout, while those with 75-85 percent attendance can receive up to 75 percent, and those with 60-75 percent attendance receive 50 percent. Employees whose attendance falls below 60 percent are not eligible for any variable payout, in line with the company's five-day work-from-office policy.

The trend is not isolated to TCS. Rival Infosys also lowered its average Q1 variable payout to 70 percent, down from 80 percent a year earlier, amid subdued demand across the IT sector and continuing concerns over AI's impact on revenue growth.