The biggest IT services provider in India, Tata Consultancy Services (TCS), has strongly clarified recent media claims that implied major reductions in bonus payments for its top executives. For the January–March 2025 period, the company reported that over 70% of its employees received the full 100% Quarterly Variable Allowance (QVA). This declaration coincides with increased scrutiny of employee remuneration policies in the Indian IT sector, particularly in light of the industry’s struggles in the global economy.
TCS emphasized that its approach to variable pay has not changed and remains consistent with past quarters. The company explained that the QVA structure is designed to reflect the financial and operational performance of individual business units. As a result, while the majority of employees received the full bonus, payouts for the remaining workforce were determined by the specific performance of their respective units. This means that employees at similar levels could see different bonus amounts, depending on how their business unit performed in the last quarter.
Variable Pay Structure and Industry Context:
The QVA, or Quarterly Variable Allowance, is a performance-linked bonus paid to TCS employees every quarter. While more than 70% of employees received the full payout this time, the remaining employees’ bonuses were calculated based on the business performance of their respective units. This practice, TCS said, is standard and has been followed in previous quarters as well.
Reports had surfaced earlier suggesting that some senior employees received as little as 20% of their variable pay for the January to March quarter, raising concerns within the IT sector. However, TCS clarified that these variations are not new and are aligned with its established compensation policy. For employees not included in the 70% full QVA group, the payout is directly linked to the achievements of their business unit, rather than a company-wide average.
This clarification comes at a time when many IT companies are making difficult decisions regarding compensation. In order to control expenses, the industry has been managing a difficult worldwide climate, with some companies postponing pay increases and restricting bonus plans. TCS itself declared in April 2025 that it would postpone its yearly pay increases, citing the necessity of reviewing business conditions later in the year and the unpredictability of the global economy.
Workforce Trends: Hiring, Promotions, and Attrition
Despite the cautious approach to compensation, TCS has continued to invest in its workforce. In the last quarter, the company added 625 employees, rebounding from a net reduction in the previous quarter. Over the course of the fiscal year 2025, TCS promoted more than 110,000 employees, highlighting its ongoing focus on career development and talent retention. The company also onboarded 42,000 freshers in FY25, with plans to maintain a similar hiring pace in the coming year.
Attrition, a key metric in the IT sector, saw a slight increase to 13.3% in the fourth quarter. However, the annualized attrition rate showed a year-over-year decrease, indicating some stabilization in employee turnover. TCS CEO K Krithivasan acknowledged a slight dip in business momentum towards the end of the quarter, which contributed to the company’s cautious outlook on talent investments and cost management.
TCS’s overall workforce stood at 607,979 as of March 2025, making it one of the largest private sector employers in the country. The company reiterated its commitment to upskilling and employee development, with continued investment in training for both freshers and experienced hires.
Balancing Talent and Cost in a Shifting Market:
TCS’s recent explanation on bonus payouts shows the company’s efforts to keep its compensation policies open and consistent. By giving more than 70% of its workers 100% QVA, TCS has aimed to convince both its employees and the industry at large that it values performance and is still dedicated to rewarding its employees—even during uncertain times.
Flexibility is also made possible by the company’s variable compensation system, which guarantees that bonuses correspond with the real performance of business divisions. This strategy aids TCS in striking a balance between the demands of a demanding global business environment and the requirement to invest in talent.
Pay practices like those at TCS are probably going to be closely watched as the IT industry continues to adjust to changing customer expectations and economic swings. In order to manage employee expectations and ensure the long-term viability of the firm, the company has chosen to keep its usual bonus program for the majority of its employees while tying payouts for others to unit performance.
The coming quarters will be critical for TCS and its peers as they navigate the dual challenges of retaining top talent and managing costs. For employees, the assurance of fair and performance-linked rewards remains a key factor in job satisfaction and loyalty, especially in a sector known for its competitive talent landscape.
