No variable pay for TCS trainees for first six months

India’s top software exporter Tata Consultancy Services (TCS) has said that fresh recruits will not be eligible for variable pay during the first six months when they are on training. The decision will take effect from this quarter when about 1,500 freshers are scheduled to join the company.

“The compensation re-structuring is primarily from a productivity point of view — we want them (freshers) to understand variable component is really a ‘variable’ and will depend on how well they perform in their project. We want that accountability and mindset change to happen from day one,” said Ajoy Mukherjee, head, global HR. During the training period, freshers are not billable as they don’t work on any client projects, and hence do not contribute to company profits.

Freshers at TCS get variable pay of Rs 5,000 a month. The move will result in savings of close to Rs 75 crore for the company, as it has recruited about 25,000 students from campuses in 2008. These freshers are expected to join the company during the course of fiscal but depending on business demand and training capacity.

“There will be savings as a result of this — not very significant but not very low either. The primary reason is not savings, but a mindset change,” said Mr Mukherjee. He said TCS would honour all the campus offers that were made with 1,500 freshers joining this quarter and the rest by the end of the fiscal.

The concept of variable pay was introduced for freshers last year, and the training period, which was for three months, was extended by another three months in the fourth quarter of last fiscal. The company had also decided not give any increments this year, and Mr Mukherjee said there were no changes to this as of now. Last year, it had given a 10% annual increment to all employees. However, those employees, who have been promoted, have been given nominal increments this year, he said.

Companies are not yet returning to big spending and TCS is still in a mode of being as efficient as possible, he added.

The company is also recruiting 250 freshers from US universities for its Cincinnati campus in the current fiscal. However, these freshers have a different compensation structure and will not be affected by the change in variable pay policy. TCS is attempting to replicate the same model it has in India on its Cincinnati campus as well. It will hire students from technical fields on campus and train them.