Tata Consultancy Services (TCS), India’s premier IT services corporation, has witnessed a remarkable return to office with 70% of its employees resuming on-site work. This shift comes on the heels of TCS revising its policy to link variable pay to office attendance, an initiative introduced in April 2024.
Milind Lakkad, Chief Human Resources Officer at TCS, confirmed this development during a press conference following the announcement of TCS’s Q1 FY25 results. Lakkad revealed that employees who did not comply with the five-day office attendance mandate faced monetary penalties, although he refrained from specifying the exact figures. “There are implications for people not coming to the office. We do not give out the amounts of what that impact would be. It is something we are doing more from a discipline standpoint and not for any other reasons,” he stated.
Lakkad conveyed optimism about the situation, noting the growing realisation among employees about the benefits of working from the office. “I’m not worried about that. People have realised the value of coming to the office; some of them have come to the office for the first time because they joined TCS during the pandemic. All of that is creating positive energy in the system,” he added.
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The updated variable pay policy categorises attendance into four slabs, each determining the percentage of variable pay an employee can receive. Employees with less than 60% office attendance receive no variable pay for that quarter, while those attending between 60-75% receive half. An attendance rate of 75-85% garners three-quarters of the variable pay, and full pay is reserved for those exceeding 85% attendance.
TCS's workforce has increased by 5,452 employees in the first quarter of FY25, bringing the total headcount to 606,998 as of the end of June, up from 601,546 in March. This growth follows three consecutive quarters of declining headcounts. The previous fiscal year saw TCS’s first annual drop in its employee base in 19 years, with a reduction of 13,249 employees. The company also reported a decline of 1,759 employees in Q4 FY24.
Lakkad expressed satisfaction with the annual increment process and the net headcount addition. He attributed the company’s industry-leading retention rates and robust business performance to a strong focus on employee engagement and development. The attrition rate improved to 12.1% from 12.5% in the previous quarter ending March, and Lakkad anticipates it will remain stable in the forthcoming quarter.
Despite the temporary nature of the new attendance policy, Lakkad emphasised its effectiveness, highlighting that 70% of the workforce has now returned to office, with the number rising weekly. “This number is increasing every week,” he noted. Lakkad also stressed that a significant portion of the workforce, approximately 40%, had joined TCS during the pandemic and had never worked in an office environment before.
In addition to the changes in workforce dynamics, TCS reported a 9% year-on-year increase in net profit, reaching ₹12,040 crore for the first quarter of FY25, and a 5.4% rise in revenue from operations, totalling ₹62,613 crore. The company’s board has also declared an interim dividend of ₹10 per equity share, payable on August 5.
The strategic linking of variable pay to office attendance has evidently incentivised employees to return to physical office spaces, marking a significant step in TCS’s post-pandemic operational strategy.
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