Tata Consultancy Services (TCS), India’s largest IT services company, has decided to withhold quarterly performance bonuses for its senior employees in the C3A grade and above.
The decision comes after the company’s performance fell short of internal targets in the September quarter. This is the first time in at least two years that TCS has withheld bonuses for some workers, according to an internal memo seen by Reuters.
As reported by Reuters, an internal memo from Chief Human Resource Officer Sudeep Kunnumal says associates in C3A grade and above will receive no quarterly variable allowance for the period because the company’s performance for the quarter falls short of internal targets.
The affected group typically includes employees with about seven to 10 years of experience through to senior-level management. The memo adds that junior-level employees will receive 100% of their eligible variable pay.
TCS does not respond to emails seeking comment. Employees speaking on condition of anonymity say the company typically awards 50% to 100% of variable pay, and that this is the first time in at least two years management explicitly says no bonuses will be paid to some staff.
The decision comes as India’s largest IT services company reports its weakest sequential revenue growth for a September quarter in three years, pointing to continued pressure on traditional IT services demand even as AI-related revenue jumps nearly 20%. Investors nonetheless welcome the rise in AI revenue, sending the stock up as much as 6.2% on Friday.
India’s $315 billion IT sector is also facing uncertainty linked to the Trump administration’s latest immigration crackdown. The administration suspends major IT outsourcers, including TCS, Infosys and HCLTech, from a key green-card program on Thursday, broadening measures it says are aimed at fraud and protecting U.S. jobs.
