According to an internal memorandum, Tata Consultancy Services (TCS) has decided not to pay quarterly bonuses to senior category employees after failing to achieve planned performance metrics. This marks the first instance in at least two years where variable pay has been completely frozen for a segment of employees.
The memorandum, which was reviewed by Reuters, states that employees in category C3A and above will not receive the quarterly variable allowance (QVA) this quarter. Sudip Kunnumal, Head of Human Resources, stated that this decision was made after careful analysis because the company's quarterly results fell below internal targets.
Employees in groups C3A and above typically have seven to ten years of experience and hold positions up to senior management level. Furthermore, the memorandum clarified that junior staff will receive one hundred percent of their entitled payment.
According to employees who wished to remain anonymous, the company usually awards variable pay ranging from 50 to 100 percent, and this explicit announcement of bonus denial is unprecedented in the last two years.
This move comes as the country's largest IT company reported its weakest sequential revenue growth in September in three years. This indicates persistent demand pressure in traditional IT services, despite revenue related to artificial intelligence increasing by almost 20 percent. However, the growth in AI revenue was approved by investors on Friday, when the company's shares rose by 6.2 percent.
Moreover, India's IT sector, valued at $315 billion, faces uncertainty caused by the Trump administration. This administration suspended the participation of major IT outsourcing firms, including TCS, Infosys, and HCLTech, in a key green card program on Thursday, expanding the campaign aimed at combating fraud and protecting American jobs.