Meltdown impact: TCS to cut Q2 variable pay?

KOLKATA: Is a cut in variable pay in the offing for experienced staff at India’s biggest IT company Tata Consultancy Services (TCS)? There is a fear that TCS— which last resorted to such a step in the third quarter of 2007-08—may not pay employees upwards of trainees a portion of their variable pay for FY09 Q2 as part of an austerity measure forced by the global financial meltdown.

The apprehension is that employees, excluding trainees, may be denied the non-fixed portion of their variable pay for July-September 2008. Provided the fears come true, about 70% TCS employees or nearly 70,000 staff would be impacted by such a step.

Contacted for a response, a TCS spokesperson said: “We are now in a silent period and will be able to offer a clarity on this only after our Q2 results are announced.” Variable pay at TCS is divided into two components— a fixed portion which an employee is assured of at all times, and a changeable proportion which alters depending on the performances of the employee and the company.

For instance, if the variable pay of an employee is Rs 100, he is guaranteed the fixed part or Rs 70 under any circumstances . Whether an employee receives the balance Rs 30 or the changeable part would depend on not just how he had fared but also the company.

As part of a policy, TCS pays the fixed portion of the variable pay along with the employee’s salary every month. The non-fixed proportion of the variable pay for a particular quarter is paid along with the salary in the month which follows the end of that three-month period.

TCS’ decision to reduce variable payout for Q3 of 2007-08 was not announced in an email from the company top brass, but through a message posted on the organisation’s portal for employees. The move had kicked off a storm which forced the company to stop tinkering around with variable pay for the last quarter of 2007-08 and first quarter of 2008-09 .

Source : ET