India’s largest IT company, Tata Consultancy Services (TCS), has increased quarterly variable payouts for many mid and senior-level employees in the fourth quarter of FY26.
The move is being seen as a positive sign after nearly two years of lower payouts and slower growth in the IT sector.
According to reports, employees in several mid and senior bands received around 60% to 80% of their quarterly variable pay for the January–March period.
Earlier, many employees in these categories were getting only 20% to 50% payouts.
Variable Pay Now Linked to Office Attendance
TCS has also changed the way variable pay is calculated.
The company is now linking quarterly variable pay not only to employee performance but also to office attendance.
Under the current policy:
Employees with less than 60% office attendance will not receive variable pay
Employees with attendance above 85% become eligible for full payouts
This policy is part of TCS’ push to bring more employees back to the office.
Junior Employees Continued to Get Better Payouts
Even during the period of reduced payouts, many junior employees and staff working in delivery-focused projects reportedly continued to receive higher variable compensation.
Sources say employees involved in critical business operations often received close to full payouts despite the slowdown.
The IT sector has been facing challenges due to weak global technology spending, especially in North America and Europe, where companies reduced spending on non-essential tech projects.
AI and Cloud Teams Reportedly Received Higher Rewards
Reports suggest payout levels were different across teams.
Employees working on:
AI-related projects
Cloud transformation
Cybersecurity
Strategic accounts
High-utilisation projects
may have received better payouts compared to others.
TCS has been focusing heavily on artificial intelligence and automation as companies worldwide increase investment in AI-driven services.
TCS Betting Big on AI-Led Growth
In FY26, TCS carried out a major internal reorganisation to align itself with growing demand for AI-based services.
The company has also announced plans to expand into AI infrastructure and data centre opportunities.
TCS CEO K Krithivasan had earlier said that AI-led deals are generating premium revenue compared to traditional IT services and could become a major growth driver in the future.
Salary Hikes and Better Business Momentum
TCS was also among the first major IT companies to roll out salary hikes effective from April 1.
Over the past few quarters, many IT firms delayed increments, reduced bonuses, and slowed promotions because of weaker revenue growth.
However, improving deal wins and better client spending are now creating cautious optimism across the industry.
While recovery in the IT sector is still gradual, the latest payout increase suggests TCS may be seeing early signs of stronger business momentum.
