Good News for TCS employees, amid uncertainty over wage hike, Ratan Tata's company now rolls out 100%...

Tata Consultancy Services (TCS), the largest IT services company in India, has declared a full payout of the Quarterly Variable Allowance (QVA) to over 70% of its employees for the April–June quarter (Q1 FY26), as stated in an internal mail reviewed by The Economic Times.

This marks the second consecutive quarter where the majority of its employees receive the full QVA, despite ongoing global macroeconomic challenges and budget constraints from clients within the industry.

How the payout is divided?

The company clarified that the payout for employees in higher grades, usually in managerial and leadership positions, will remain variable and tied to the performance of their specific business units, a policy the company has consistently maintained over several quarters.

"We have provided a 100 percent QVA to over 70 percent of the company. For all other grades, the QVA is determined by their unit's business performance. This aligns with our standard practice across quarters," TCS stated in a previous statement issued in May, when a full QVA payout was also made for the January-March quarter.

The company's internal grading system starts with Y-level trainees, followed by system engineers (C1), and advances through C2, C3, C4, C5, and executive leadership levels. The C3 and higher bands generally consist of senior managers and business unit heads.

TCS faces slowest growth 

Despite its commitment to employee payouts, TCS reported a mixed financial performance in Q1 FY26. Net profit increased 6% year-on-year to Rs 12,760 crore, up from Rs 12,040 crore in the same period last year. However, revenue grew just 1.3% year-on-year to Rs 63,437 crore. In constant currency terms, revenue declined 3.1%, and sequentially, revenue was down 1.6% — the slowest growth since the Covid-affected Q1 FY21.

The company attributed ongoing drags on demand to global macroeconomic uncertainty, geopolitical tensions, and sluggish discretionary tech spending. CEO K Krithivasan mentioned that a recovery in discretionary investments was still not happening. "This trend has continued and intensified to some extent in this quarter," he stated during the earnings call.

Despite the challenging business environment, TCS added 5,060 employees during the April-June quarter, building on the 625 net additions made in the January-March period. The company’s workforce now numbers nearly 613,000 — the highest among Indian IT firms. Attrition for the quarter was 13.8 percent.