India’s premier IT services provider, Tata Consultancy Services (TCS), has recently revealed its decision to offer 100% variable pay for Q2FY24 to employees whose incentives are connected to the company’s overall performance. This announcement comes on the heels of TCS reporting its quarterly results. Notably, this move will benefit 70% of TCS’s workforce, ensuring they receive the full variable payout. For the remaining employees, the variable payout will be contingent on the performance of their respective business units.
TCS Leads the Way with 100% Variable Pay
TCS has set a precedent in the industry by choosing to provide 100% variable pay to a significant portion of its employees for the second quarter of the financial year 2024. This approach underscores TCS’s commitment to rewarding its employees based on their contributions to the company’s performance. Milind Lakkad, TCS’s Chief Human Resources Officer, stated, “We are going to have 100% variable pay for 70% of our workforce. The rest of the workforce will get paid based on the business unit performance.”
It’s worth noting that TCS had previously paid out 100% of the variable pay during the first quarter of FY24. This move sets TCS apart from its industry peers, such as Infosys and Wipro, who distributed 80% variable pay in the first quarter. Additionally, TCS successfully implemented its wage hike during Q1, while several other IT companies, including Infosys, Wipro, and HCLTech, experienced delays in their wage hikes.
TCS’s Employee Headcount and Attrition Dynamics
During Q2FY24, TCS reported a reduction in headcount, with more than 6,000 personnel leaving the organization. TCS attributes this decrease to its prior investments in nurturing talent, emphasizing that the company is now focused on enhancing utilization and productivity.
Milind Lakkad emphasized that TCS has managed to mitigate attrition. The company has strategically adjusted its hiring numbers, resulting in the drop in headcount compared to the previous quarter. Notably, attrition rates have witnessed a notable decrease, standing at 14.9% over the last twelve months, a decline from the previous quarter’s 17.8%.
Lakkad explained, “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.”
