Tata Consultancy Services (TCS), India’s largest IT services firm, has once again slashed the variable pay for its senior-level employees, marking the third consecutive quarter this has happened. According to a Moneycontrol report, TCS has paid out 100% of the Quarterly Variable Allowance (QVA) to over 70% of its workforce.
For the remaining 30%, the payout is dependent on team-level business performance. As reported by The Economic Times, a company spokesperson said,
“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.”
In April, during the quarterly earnings call, TCS Chief HR Officer Milind Lakkad addressed the matter of employee appraisals, stating that they have been postponed due to ongoing global economic pressures and the tariff war.
“Because of the uncertain environment, we will decide during the year on wage hikes. It can be at any time, depending on business,”
he said, but assured employees that hikes would happen before the end of the year.
“A decision on the wage hike will be taken within the year,"
he added.
The move to reduce variable pay is not new. Since September 2024, for the July–September quarter, Tata Consultancy Services (TCS) began linking variable pay to office attendance. This new attendance policy became effective in April 2024, and it has had a major impact on payouts.
Some employees reportedly received only 20% to 40% of their variable pay due to not meeting attendance benchmarks.
Under the current policy, here’s how attendance influences QVA:
Less than 60% attendance: No variable pay
60–75% attendance: 50% of variable pay
75–80% attendance: 75% of variable pay
Over 85% attendance: Full 100% variable pay
This policy affected variable payouts in both Q2 and Q3 of FY2024-25, with senior employees particularly impacted.
Traditionally, TCS rolls out annual pay hikes in Q1, with revised salaries being reflected in Q2 along with arrears. However, due to market volatility, the company has altered this timeline for FY25, leaving employees uncertain about when they’ll see their expected raises.
The history of Tata Consultancy Services (TCS), a multinational IT services and consulting company headquartered in Mumbai, India, spans over five decades. Here's a look at its journey:
1968: The Beginning: TCS was established in 1968 as a division of Tata Sons, initially named Tata Computer Systems. The vision behind its creation was to address the growing need for computer services within the Tata Group and to foster the development of the IT industry in India. The prime mover behind this initiative was J.R.D. Tata, and the operational leadership was entrusted to Fakir Chand Kohli, who is fondly remembered as the "Father of the Indian IT Industry" and served as the first CEO of TCS.
Early Focus: TCS began by providing punched card services to Tata Steel (then TISCO) and soon secured its first major project: automating the inter-branch reconciliation system for the Central Bank of India in 1969.
Venturing Abroad: In 1971, TCS took its first step into the global market by undertaking a project for an electric company in Iran, developing inventory and stock control systems. This marked the beginning of TCS's international aspirations.
Pioneering Offshore Delivery: In 1973, TCS executed its first offshore project for a US client, converting hospital accounting software despite not having the compatible computer system in India. They built an in-house tool to write the code, which was then shipped to the US, pioneering the global delivery model.
Global Footprint: TCS established its first sales office in New York in 1979, headed by S. Ramadorai, further solidifying its presence in the international market.
Focus on R&D: In 1981, TCS established the Tata Research Development and Design Centre (TRDDC) in Pune, India's first software research center, emphasizing innovation and the development of indigenous technology.
Early Software Development: TCS ventured into software development in 1982, creating a data dictionary for Burroughs, which eventually led to the development of a major accounting software package.
Strategic Partnerships: TCS formed significant international relationships, including a partnership with the Swiss National Bank for an offshore project in Delhi in 1983, showcasing its capability to handle complex international assignments.
Leadership Transition: In 1996, S. Ramadorai took over as CEO upon the retirement of F.C. Kohli, ushering in a new era of leadership.
Key National Projects: TCS built the core platform for the National Securities Depository Limited (NSDL), India's first electronic depository, in 1996, playing a crucial role in the modernization of India's financial infrastructure.
Y2K Opportunity: TCS pioneered the concept of a "software factory" to address the Y2K crisis, automating the conversion of millions of lines of code and establishing itself as a leader in this global remediation effort by 1997.
E-Commerce Focus: Recognizing the burgeoning opportunities in the digital space, TCS established its E-Business division in 1999.
Major Deal Wins: TCS secured a $100 million project with GE Medical Systems in 2002, which was the company's largest IT services deal at the time.
Public Listing: On August 9, 2004, TCS went public with an IPO worth US$1 billion, the largest IPO by a private sector company in India at that time. Its shares were listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
Venturing into New Domains: TCS entered the bioinformatics sector in 2005, marking its diversification into specialized technology areas.
Co-Innovation Network (COIN): In 2006, TCS launched the Co-Innovation Network (COIN), connecting startups and academic partners to foster collaborative innovation and solve customer challenges.
First Billion-Dollar Deal: TCS signed its first US$1 billion deal in 2007, a significant milestone demonstrating its growing scale and capabilities in the global IT services market.
Cloud-Based Services: In 2009, TCS introduced iON, extending cloud-based services to small and medium businesses (SMEs).
Brand Building: TCS became the title sponsor of the New York Marathon in 2014, enhancing its global brand visibility.
Digital Transformation Focus: TCS embraced digital transformation, focusing on areas like cloud, cybersecurity, IoT, and AI.
"Building on Belief": In 2021, TCS refreshed its brand identity and updated its tagline to "Building on Belief," reflecting its commitment to long-term value creation and innovation.
Market Capitalization Milestone: TCS achieved a market capitalization of US$200 billion in September 2021, becoming the first Indian IT company to reach this valuation.
Global Recognition: TCS has consistently been recognized as a Top Employer globally, highlighting its strong employee engagement and talent development practices. In February 2025, TCS achieved a new milestone by earning its first-ever Enterprise-Wide Top Employer Certification from the Top Employers Institute.
Revenue Milestones: TCS crossed the $30 billion revenue mark in the financial year 2024-25, demonstrating its robust growth and market position. It has also become the world's second-largest IT services company in early May 2025.
Focus on AI and Innovation: TCS continues to invest heavily in AI and GenAI capabilities, forming strategic partnerships like the one with Google Cloud to enhance its offerings in this domain.
Strong Order Book: TCS has consistently maintained a strong order book, reinforcing confidence in its long-term resilience and growth prospects.
Global Presence: As of 2024, TCS operates in over 50 countries with more than 500 offices globally, with a diverse workforce exceeding 607,000 employees from over 150 nationalities as of March 2025.
From its humble beginnings as a division of the Tata Group to its current stature as a global IT powerhouse, TCS has played a pivotal role in shaping the IT landscape in India and across the world. Its history is characterized by a commitment to innovation, customer focus, and a strong foundation built on the values of the Tata Group.