InvestorQ : What are the changes that TCS has brought about in its salary incremental policy?
indhumathi Sayani made post

What are the changes that TCS has brought about in its salary incremental policy?

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3 weeks ago
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TCS has changed its salary increment policy for lateral hires amidst soaring staff costs and falling profit margins. Clearly, rising pay packages are not addressing the issue of attrition and that has called for a fresh approach. TCS ended the practice of giving a marginal hike to lateral hires after they complete one year in service. Going ahead, such employees would only receive pay hikes during the regular appraisal cycle, post completion of 1 year.

The contention of the company is that employees were already coming in at high salaries. Giving them a pay hike on completing one year and then another one in the regular appraisal cycle was getting too steep to afford. This will trim costs substantially with its over 6 lakh employees and plans to add another 40,000 hands this fiscal. Going ahead, increments will be part of the annual salary appraisal following their one-year anniversary. IT companies are being cautious ahead of budget constraints amid a looming US recession.

Staff wages make up 60-70% of total expenses for IT companies, so it will make a difference. This year, bonuses and variable pay has already been impacted. Labour unions are up in arms, but it had to happen in a tough year and there was little choice.

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