TCS discontinues anniversary hikes for laterals, annual appraisal to continue

In a formal letter to those employees who had completed a year with the organisation during the current fiscal year, TCS said they would receive their next increment only along with the annual appraisal cycle, which usually takes place in March.

ET has reviewed a copy of the letter.

“Thank you for your contribution towards a year of growth. Your continued commitment and effort will help TCS sustain its leadership position. Your annual compensation will be reviewed in the next annual appraisal process,” according to the letter.

Sources told ET that the company used to roll out hikes for all employees on their first anniversary in addition to their annual hikes.

In response to ET’s queries, TCS said its increments were in line with industry benchmarks.

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“Even during the (Covid-19) pandemic, we ensured our increment cycles were unaffected. It is incorrect to suggest otherwise. All experienced hires will be given an increase as part of the annual salary appraisal that follows their one-year anniversary,” a spokesperson said.

The development comes at a time when peers

and have either reduced or suspended variable payouts to employees. TCS has, however, said that it would give 100% variable payouts to its employees.

As IT companies struggle with ballooning employee costs and macroeconomic uncertainty in key geographies, they are tightening their purse strings as a cautionary measure, sector experts said.

The IT firms had rolled out multiple hikes during 2021 and 2022 fiscal years to attract and retain talent and service a high demand market.

According to a commentary by the IT services companies during their first quarter results, clients were getting slightly cautious about their expenses due to recession fears.

ET reported last month that Indian IT companies were clamping down on the variable pay component of tech professionals amid rising margin pressures, and with a view to control attrition and costs.

However, experts said the impact is more on mid- and senior-level employees as companies are cognizant of zooming attrition at the entry and junior levels.

The mid- to senior-level employees have an experience level of 7-15 years and earn over Rs 10 lakh per annum on average.