TCS delays select employees' performance bonus, variable pay for Q1 FY23

India’s largest software services exporter Tata Consultancy Services (TCS) has delayed variable compensation payout or performance bonus by a month for some employees for the June quarter (Q1 FY23).

The company has delayed the performance bonus for C3A, C3B, C4, and equivalent grades by almost a month, according to The Economic Times. Employees who fall into these grades are assistant consultants, associate consultants, and consultants. The due amount, which was supposed to be paid in July, is now likely to be paid by August end, claims the report referring to an internal email of the Tata company.

The report, however, didn’t reveal any specific details for the delay and stated that TCS claims that all its compensation and bonus cycles are as per the company’s plan.

One of the TCS employees, who is impacted by the company’s delay, said that the quarterly performance bonus is usually given in the payroll that follows the end of the quarter, but this time, TCS had communicated a delay. This was an administrative issue that will impact a small percentage of employees, said the Economic Times quoting sources with the company.

As per the source, the delay is not due to cost concerns and the performance evaluation process hasn’t been completed due to the massive size of the workforce. They further added that this shouldn’t be linked to actions taken by any other IT company.

This development comes days after another IT major Wipro had paused variable pay for mid and senior-level employees.

According to the recent media reports, employees belonging to C bands and above (managers to C-suite level) wouldn’t receive any variable payouts, while associates in A & B Bands (freshers to team leader levels) would get 70 per cent of the target variable pay for the Q1 FY23.

TCS, at the end of June, had a workforce of around 6,06,300 employees. Moreover, the employees' experience in the impacted bands ranges from 7 to 15 years along with a pay package of Rs 10 to 30 lakh per annum. Roughly 10-15 per cent of TCS employee base fall under this category. Usually, the annual variable component accounts for nearly 10 per cent of the pay package.

The report also reveals that TCS has already given variable pay to freshers and other junior-level associates for the Q1 FY23.