TCS Withholds Quarterly Variable Pay for Senior Employees

Tata Consultancy Services (TCS) will withhold quarterly variable pay for employees in grade C3A and above for the September 2026 quarter, citing performance below internal targets.

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Junior-level employees will receive 100% of their eligible quarterly variable allowance, according to an internal memo reported by Reuters on October 9, 2026. The decision affects employees ranging from those with around seven to 10 years of experience to senior management.

According to Reuters, this is the first time in at least two years that TCS has explicitly withheld the entire quarterly variable payout for the affected employee group.

Who Will Be Affected?

In the internal memo, Sudeep Kunnumal, Chief Human Resources Officer at TCS, said employees in grade C3A and above would not receive the quarterly variable allowance (QVA) for the September quarter.

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The memo attributed the decision to the company’s performance falling short of internal targets. Junior-level employees, however, will receive their full eligible quarterly variable pay.

Also Read: TCS Adds 4,258 Employees in Q2, Headcount Reaches 5.98 Lakh

Employees who spoke to Reuters on condition of anonymity said TCS typically awards between 50% and 100% of eligible variable pay.

The latest decision therefore marks a change in the payout practice for the affected employees. TCS had not responded to Reuters’ request for comment at the time of publication.

TCS Reports Slow Sequential Revenue Growth

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The decision follows TCS’s September-quarter results, announced on October 8, 2026.

The company reported revenue growth of 0.5% sequentially in constant-currency terms, its weakest sequential growth for a September quarter in three years, according to Reuters.

At the same time, TCS reported annualised artificial intelligence revenue of $3.1 billion, crossing 10% of its total revenue. The figure represented an increase of nearly 20% from the previous quarter.

The company reported an operating margin of 24% and a workforce of 598,056 employees at the end of the quarter. Its reported last-twelve-month attrition rate for IT services stood at 13.3%.

Final Comments

The decision highlights the link between business performance and performance-linked compensation at TCS.

While the company continues to report growth in AI-related revenue, employees in the affected grades will not receive a quarterly variable payout for the September quarter.

The development will be relevant to employees tracking changes in compensation practices across India’s IT services industry.