TCS Q2 FY24: IT company to roll out 100% variable pay to majority staff

Indian IT services company Tata Consultancy Services announced its Q2 FY 2023-24 results on Wednesday. The company’s Chief Human Resources Officer noted during the earnings call that the company will give 100 per cent variable pay for Q2 FY24 to employees whose payouts are linked to the company’s performance. This means 70 per cent of the company’s workforce will receive the full variable payout, the CHRO noted.

Variable pay

CHRO Milind Lakkad explained, “We are going to have 100 per cent variable pay for 70 per cent of our workforce. The rest of the workforce will get paid based on the business unit performance.”

Even in Q1 FY24, TCS had paid out 100 per cent of the variable pay to a major part of its workforce. On the other hand, its peers Infosys and Wipro rolled out only 80 per cent variable pay for the quarter. 

Moreover, the IT company also completed its wage hike in Q1, unlike its peers who have delayed it.

Headcount drops

The Indian IT major saw a net decline in headcount of 6,333 employees on a quarterly basis. TCS’s net employee headcount was at 608,985 as of September 30. The company’s employee headcount was at 615,318 in the June quarter.

The IT services company witnessed a drop in headcount on a yearly basis too. Their headcount in Q2FY23 was at 616,171. The headcount in Q2FY24 was down by 7,186 employees.

The CHRO attributed this to investments in talent the company has made. He noted that the IT major has recalibrated its hiring targets.

“Our strategy of proactively hiring bright freshers and investing in training them with the right skills is paying off. With that talent coming on stream and with reduced attrition, we were able to recalibrate our gross additions, keeping it below the departures during the quarter, driving up productivity and enhancing project outcomes,” Lakkad explained.

Attrition moderates

The attrition at the Indian IT company had moderated both sequentially and on-yearly basis. The LTM IT Services attrition rate for Q2 FY24 was at 14.9 per cent. The attrition in Q2 FY23 was around 21.5 per cent, a difference of 6.6 percentage points. Attrition improved nearly 3 percentage points on a quarterly basis. The attrition in Q1 FY24 was at 17.8 per cent.

Financials

TCS reported a rise of 8.7 per cent in its consolidated net profit, which came in at Rs 11,342 crore for the September quarter. The company’s board approved a buyback of Rs 17,000 crore at a price of Rs 4,150 per equity share, a premium of about 15 per cent. This is the company's fifth share buyback in a span of six years.