One of Ratan Tata’s favorite companies and Indias leading IT services company Tata Consultancy Services (TCS) has reportedly slashed the variable pay for many of its senior employees for the July-September 2024 period (Q2 FY25). This reduction comes despite compliance with the companys work-from-office policy due to the challenging market conditions faced by the IT giant. TCS Reduced Variable Pay  According to Zee News report TCS employees received only 20-40% of their expected variable pay for Q2 FY25 while some received no payout at all. This marks a significant decrease compared to the previous quarter where payouts were around 70%. The cuts have been attributed to negative business demand and economic uncertainties which have impacted growth across Tier-I IT companies. How TCS Pays Variable Compensation TCSs variable pay structure is designed to reward both in-office attendance and the performance of individual business units. The company had updated its attendance policy in April 2024 requiring employees to maintain a minimum of 85% attendance in the office to qualify for full variable pay. Heres how the variable pay structure is defined based on attendance: 85% or higher attendance: 100% of the variable pay. 75-85% attendance: 75% of the variable pay. 60-75% attendance: 50% of the variable pay. Less than 60% attendance: No variable pay. This approach reflects TCSs emphasis on employee attendance while balancing performance metrics amid challenging economic conditions. TCS Financial Performance in Q2 FY25 Despite the cut in variable pay TCS recorded modest growth in its financial performance. For Q2 FY25 the company reported a 5.5% year-on-year increase in revenue in constant currency terms totaling Rs 64259 crore. The net profit stood at Rs 11909 crore reflecting the impact of ongoing economic uncertainties on overall demand. TCS’s On Variable Pay Reduction In response to the variable pay cuts a TCS spokesperson clarified that junior employees received their full Quarterly Variable Allowance (QVA). However the variable pay for employees in other grades was determined based on the performance of their respective business units. This practice aligns with TCSs standard compensation policies which are influenced by both individual and unit performance. As the IT industry navigates through a period of uncertainty TCSs move may signal broader trends in employee compensation within the sector.