Tata Consultancy Services (TCS), India’s largest IT services company, has announced a quarterly variable allowance (QVA) rollout for its employees, with junior-level staff set to receive a full 100 percent payout. The decision aims to boost employee morale and align rewards with performance as the company navigates a challenging business environment.

According to Sudeep Kunnumal, Chief Human Resources Officer at TCS, the new QVA structure ensures fair recognition across levels. While junior employees in grades C, C1, and C2 (and equivalent) will get their entire variable component, those in C3A and above will see payouts linked to business performance and profitability. Kunnumal also indicated that variable pay for mid and senior employees could exceed last year’s levels, depending on unit performance metrics.

The company has also implemented salary hikes effective September 25 for associates up to grade C3A, with top performers receiving double-digit increases. The move comes amid heightened competition in the IT sector and an evolving focus on performance-based compensation models.

In its second-quarter results for FY26, TCS reported a 3.8 percent sequential drop in net profit to Rs 12,075 crore, down from Rs 12,760 crore in the previous quarter, even as revenue rose 3.7 percent to Rs 65,799 crore. Despite headwinds, TCS continues to invest in workforce development and technology capabilities.

The company’s employee strength saw a reduction of nearly 20,000 during the quarter. However, TCS highlighted that the number of employees trained in advanced technologies such as artificial intelligence and machine learning has doubled to 1.59 lakh in the September quarter — a reflection of its ongoing digital transformation initiatives.