According to documents reviewed by ET, Tata Consultancy Services (TCS), one of the country’s largest IT service providers by revenue, has implemented 100% variable compensation for 70% of its employees as of the end of the third quarter ended on December 31. Senior employees may be paid on a variable basis based on the performance of the company, and they may be able to get as much as 100% or even more on a variable basis.
There will be at least 70% of the company’s employee base, including junior-level staff, who will get full variable pay, according to a report by ET. Similarly, senior employees will get their variable pay based on their contribution to the company’s success, and the amount could exceed 100 percent in some instances.
As well as the first quarter of FY23, TCS had also given its employees 100 percent variable pay for the second quarter. A report by the Financial Times says TCS has taken a decision to pay 100 per cent of the quarterly variable pay to all employees up to the grade of C2 or equivalent grades in accordance with an email sent to employees by CHRO Milind Lakkad. Lakkad noted in the email that the payout for grades C3A or above may vary depending on the performance of the business unit as a whole.
According to reports, TCS sent out a communication to its employees regarding variable pay in the days following the announcement of the third quarter results. The designations C3 and above are associated with senior roles at TCS, and they range from assistant consultants to associate consultants, and there are a variety of positions available under these designations.
During Q3 post earnings briefing, Seksaria had stated that the company expects to close the financial year at 25% operating margin (up 50 basis points from Q3). He went on to point out that the elevated expectations for salaries as well as the decreases in backfilling retention expenses have certainly contributed to the improvement of margins. On a sequential basis, the company had reported a decline in the number of employees during the third quarter of 2013 due to the challenging environment the IT sector is experiencing at the moment.