India’s largest IT services firm, Tata Consultancy Services (TCS), has raised quarterly variable payouts for mid-to-senior employees to as much as 80 per cent for the third quarter, marking a notable improvement after a prolonged period of lower disbursements, according to a Moneycontrol report citing sources familiar with the matter. For nearly two years, variable compensation for many mid and senior staff had been curtailed to between 20 and 50 per cent.
The latest move signals a shift in approach as the company navigates a broader restructuring exercise and sharpens its focus on artificial intelligence-led growth.
“Most mid-level employees got about 80 per cent of their variable pay out. Mid-level employees are now receiving variable pay close to what was mentioned in their offer letter CTC. For senior-level employees, it is still between 40-80 per cent,” an employee said in the report.
Another employee confirmed in the report receiving the October-December quarter payout in January.
Variable Pay Rebound After Prolonged Cuts
The increased payout suggests renewed confidence in business momentum. Earlier, TCS had maintained that over 70 per cent of its workforce, largely junior staff, continued to receive 100 per cent quarterly variable allowance. However, mid and senior employees had seen more conservative payouts.
The latest revision appears aligned with improved demand visibility and a stronger deal pipeline.
Industry peers are also reflecting a more optimistic compensation stance. Infosys increased its average quarterly variable payout to 85 per cent in Q3, while Cognizant announced a 100 per cent bonus for 2025 after entering what it calls the “Winner’s Circle”.
AI Push And Workforce Realignment In FY26
FY26 marks a pivotal phase for TCS. The company is trimming around 2 per cent of its workforce, over 12,000 employees, to recalibrate its talent mix in response to technological disruption. So far, restructuring-linked exits have totalled 7,800 over two quarters, while overall headcount declined by about 30,000 during the same period. At the same time, TCS is strengthening hiring in AI, cloud, cybersecurity, enterprise solutions, and consulting. The firm is also prioritising AI-native freshers and lateral recruits with future-ready capabilities.
“Today, more than 50 per cent of our experienced hires are coming with next-gen skill sets,” Aarthi Subramanian, executive director, president and chief operating officer, TCS, said at TCS Analyst Day in December.
Management Bets On Strong Deal Momentum
The company’s leadership has expressed confidence in its order book. In the December quarter, TCS reported $9.3 billion in total contract value (TCV), exceeding market expectations. Speaking at the company’s earnings conference on January 12, CEO K Krithivasan said, “If this trend continues, we will be somewhere closer to about $38-39 billion for the year, which will be one of the highest. We believe this order book will help us in growing in FY27 as well. We are now quite comfortable with the order book itself.”
Despite global uncertainties, including geopolitical tensions, US tariff pressures and visa policy changes, the management remains upbeat. “As far as Q4 international revenue is concerned, we are optimistic, and we will take every step that is required to see we reach the aspiration of having a revenue better than FY25,” the CEO said.
