Due to strain on operational margins, Tata Consultancy Services NSE -0.04% (TCS NSE -0.04%), India’s largest IT services provider by sales, would not grant staff one-year anniversary raises.
TCS informed those workers who had served the company for a full year during the current fiscal year in a formal letter that they would only earn their next increment in conjunction with the annual evaluation cycle, which typically occurs in March.
ET has reviewed a copy of the letter.
“Thank you for helping us have a successful year. Your ongoing dedication and work will aid TCS in maintaining its position as the industry leader. The letter states that “the next annual assessment process will include a review of your annual remuneration.”
According to sources who spoke with ET, the corporation used to give all staff raises in addition to their yearly raises on their first anniversary.
TCS stated that its increments were consistent with industry benchmarks in response to ET’s inquiries.
“We took steps to ensure that our increment cycles were unaffected even during the (Covid-19) pandemic. It is false to imply otherwise. According to a spokeswoman, all experienced hires will receive an increment as part of the yearly compensation review that comes after their one-year mark.
The change occurs at a time when rival companies Infosys NSE -0.76% and Wipro NSE -0.67% have cut back on or discontinued employee variable bonuses. However, TCS has stated that it will provide its employees with 100% variable compensation.
IT companies are tightening their purse strings as a precautionary move, according to industry analysts, as they deal with soaring staff costs and financial uncertainties in important geographies.
For the fiscal years 2021 and 2022, the IT companies implemented a number of raises in order to entice and keep talent and meet a strong demand market.
Clients were becoming a little more cautious about their expenditures due to recession fears, according to commentary made by IT services providers during their first quarter results.
In an effort to reduce costs and limit attrition, Indian IT businesses were reportedly cracking down on the variable compensation component of computer employees’ salaries.
The impact, according to experts, is greater on mid- and senior-level workers since businesses are aware of the rapidly increasing attrition at the entry- and junior-level positions.
The average annual salary for mid- to senior-level personnel, who range in experience from 7 to 15 years, is above Rs 10 lakh.
