Tata Consultancy Services denied media reports that the company has delayed the variable pay for senior employees for the first quarter of FY23.
India's largest software exporter Tata Consultancy Services (TCS) on Tuesday denied media reports which claimed that the company has delayed variable pay for senior employees for the first quarter of the 2022-23 fiscal.
"We have come across completely incorrect reports on our compensation. Variable pay is either paid in month one or month 2 as per the normal process and there is no delay in this process. 100% Variable pay is being paid for Q1," TCS said in a statement.
TCS's operating profit margin in the first quarter stood at 23.1 percent, much lower than the aspirational band of over 26 percent which hurt the profit growth. Its managing director and chief executive Rajesh Gopinathan hinted that this is the bottom for the margins, attributing the fall to annual wage hikes and promotions, which drilled a 1.50 percent hole.
Earlier, there were reports that TCS has delayed quarterly variable compensation payout for some employees by a month.
Meanwhile, Infosys has scaled back its average variable payout of employees to about 70 percent for the June quarter amid margin squeeze and high employee costs. An e-mail sent to Infosys and a response is awaited at the time of this writing.
Recently, Wipro held back the variable pay of employees mainly due to pressure on margins, inefficiency in its talent supply chain and investment in technology. Managers to the C-suite level of the company will not get any portion of variable pay, while employee grades between freshers to team leaders will get 70 percent of the total variable pay, sources aware of the matter had earlier said.
Last month, Infosys reported a lower-than-estimated 3.2 percent rise in June quarter net profit amid escalating costs. However, the company raised its full-year revenue growth outlook to 14-16 percent citing strong demand and a robust deal pipeline.
The company maintained the margin guidance at 21-23 percent but made it clear that with the increase in cost environment, it will be at the lower end of the margin outlook. Infosys' operating margins were at about 20 percent in Q1 FY23.
Shares of Tata Consultancy Services Ltd ended at Rs 3,283.75, down by Rs 70.50, or 2.10 percent on the BSE.