Tata Consultancy Services has withheld quarterly variable pay from employees at the C3A grade and above after missing internal targets for the September quarter. The decision comes as the company reported its weakest sequential September-quarter revenue growth in three years, even as annualised AI revenue rose sharply.
TCS Withholds Variable Pay From Senior Employees
TCS will pay no quarterly variable allowance (QVA) to employees in the C3A grade and above for the July–September quarter, according to an internal memo reported by Reuters. The affected group includes employees with around seven to 10 years of experience as well as staff in senior management. TCS’s chief human resources officer said the decision followed a quarter in which the company’s performance fell short of internal targets.
Junior-level employees will receive 100% of their eligible quarterly variable pay, the memo said. Employees who spoke to Reuters on condition of anonymity said TCS typically awards 50% to 100% of variable pay. They described this as the first time in at least two years that the company had explicitly said no bonuses would be paid to the affected group. TCS did not respond to Reuters’ emails seeking comment.
Revenue Growth Hits a Three-Year Low
The bonus decision follows a subdued quarter for TCS. Its revenue grew by 0.5% sequentially in constant-currency terms, marking the weakest growth for a September quarter in three years. The figure excludes the effects of exchange-rate movements and points to continuing pressure on the company’s traditional IT services business. The results also reflect cautious client spending, with some companies continuing to scrutinise discretionary technology projects.
AI Revenue Rises as Shares Gain
AI-related business offered a brighter note. TCS’s annualised AI revenue increased nearly 20% quarter on quarter to $3.1 billion, up from $2.6 billion in the previous quarter. The measure indicates the pace of revenue if the latest quarter’s AI business were sustained for a full year; it is not the same as revenue earned during the quarter. Investors welcomed the increase, and TCS shares rose as much as 6.2% on Friday.
The results underline the contrast facing TCS: demand for conventional IT services remains under pressure, while AI-related work is expanding. The latest figures may reassure investors about the company’s ability to build AI business, but the weak sequential growth and reduced variable pay for senior employees show that the broader performance challenge has not gone away.
TCS Withholds Variable Pay From Senior Employees
TCS will pay no quarterly variable allowance (QVA) to employees in the C3A grade and above for the July–September quarter, according to an internal memo reported by Reuters. The affected group includes employees with around seven to 10 years of experience as well as staff in senior management. TCS’s chief human resources officer said the decision followed a quarter in which the company’s performance fell short of internal targets.
Junior-level employees will receive 100% of their eligible quarterly variable pay, the memo said. Employees who spoke to Reuters on condition of anonymity said TCS typically awards 50% to 100% of variable pay. They described this as the first time in at least two years that the company had explicitly said no bonuses would be paid to the affected group. TCS did not respond to Reuters’ emails seeking comment.
Revenue Growth Hits a Three-Year Low
The bonus decision follows a subdued quarter for TCS. Its revenue grew by 0.5% sequentially in constant-currency terms, marking the weakest growth for a September quarter in three years. The figure excludes the effects of exchange-rate movements and points to continuing pressure on the company’s traditional IT services business. The results also reflect cautious client spending, with some companies continuing to scrutinise discretionary technology projects.
AI Revenue Rises as Shares Gain
AI-related business offered a brighter note. TCS’s annualised AI revenue increased nearly 20% quarter on quarter to $3.1 billion, up from $2.6 billion in the previous quarter. The measure indicates the pace of revenue if the latest quarter’s AI business were sustained for a full year; it is not the same as revenue earned during the quarter. Investors welcomed the increase, and TCS shares rose as much as 6.2% on Friday.
The results underline the contrast facing TCS: demand for conventional IT services remains under pressure, while AI-related work is expanding. The latest figures may reassure investors about the company’s ability to build AI business, but the weak sequential growth and reduced variable pay for senior employees show that the broader performance challenge has not gone away.
