Tag: Corporate

TCS announces 100% variable pay for junior employees, new policy implemented

TCS Announces Quarterly Variable Allowance for Employees

India’s largest IT services firm, Tata Consultancy Services (TCS), has announced a quarterly variable allowance (QVA) for its employees, committing to disburse 100% of this allowance to junior employees.

Chief Human Resource Officer (CHRO) Sudeep Kunnumal communicated the news to employees, stating that the QVA for mid and senior employees is expected to be higher compared to the previous year. “I am pleased to share with you that the annual salary hike was rolled out for associates in grades up to C3A and equivalent, effective Sep 25, with high performers receiving double-digit increments,” Kunnumal noted in an email.

Junior employees at grades C, C1, and C2 typically receive annual hikes along with full variable pay due to their positioning within lower salary brackets. However, employees at level C3A and above follow different protocols regarding hikes and variable pay, as per an anonymous employee source.

Further details in the email indicated, “We have announced our results for Q2 of FY26, and we have delivered steady growth. Thank you for your contribution. All employees up to the C2 grade (or equivalent) covered under the quarterly variable allowance (QVA) plan will receive 100% of the QVA.” Kunnumal added that individual payouts for C3A grade and above may vary based on business performance. He expressed satisfaction that the overall QVA payout for this segment would exceed that of the previous year, with actual payouts contingent upon unit performance.

On Thursday, TCS reported a 3.8% quarter-on-quarter (QoQ) decline in net profit, amounting to Rs 12,075 crore in Q2FY26, down from Rs 12,760 crore in the prior quarter. However, the company’s revenue experienced a 3.7% QoQ increase to Rs 65,799 crore, with constant currency revenue growth at 0.8%.

In related news, TCS has reduced its workforce by nearly 20,000 employees during the September quarter. On a positive note, the number of employees equipped with high-order AI/ML skills has doubled to 159,000 in the same period compared to a year ago.

TCS Announces Tiered Severance Package for 12,000 Employees

Bengaluru: Tata Consultancy Services (TCS) has implemented a tiered severance package impacting approximately 12,000 employees, primarily targeting mid- and senior-level executives. This decision is part of a significant workforce realignment as the company increases investments in artificial intelligence (AI), data management, and cybersecurity, while phasing out roles that cannot be redeployed within the organization. The announcement has sparked considerable uproar on social media.

Severance Package Details

The severance package extends to employees at all levels, including those on the bench or lacking the requisite new skills, as well as long-tenured staff with over 15 years of service.

  • Job Cuts and Payouts:
    • Employees with 10-15 years of service will receive 1.5 years’ pay.
    • Those with over 15 years will be compensated with two years’ pay.

For employees whose skills have become redundant or those who did not upskill in alignment with the company’s evolving technological needs, TCS is offering a three-month notice period pay, alongside a severance package ranging from six months to a year’s salary, depending on their tenure. The minimum severance payout is set at six months’ salary.

Support for Affected Employees

To facilitate a smooth transition for affected employees, TCS will cover outplacement agency fees for up to three months, extending this support for junior associates. The company is also continuing its mental health support initiative, TCS Cares, which provides funded access to therapists for short- to medium-term counseling.

Employees who have been on the bench or unallocated for over eight months will receive the standard three-month notice period pay.

Options for Nearing Retirement Employees

For those nearing retirement, TCS has provided an option for early retirement, which includes full access to retirement benefits and insurance, along with an additional severance payout ranging from six months to two years’ salary, again depending on tenure. Employees who have been with the company for longer periods will receive more generous terms; specifically, those with 10 to 15 years of service will be compensated with 1.5 years’ pay while those with over 15 years will receive two years’ pay as part of their severance package.

This move by TCS illustrates the company’s strategic shift towards technological advancements while also ensuring that affected employees receive adequate support during this transition.

Legal disputes among IT services firms on the rise

Legal disputes in the information technology (IT) services industry are on the rise as firms increasingly adopt platform-based and intellectual property-driven business models. The most recent case involves Mumbai-headquartered Hexaware Technologies, which is being sued by the United States-based firm Natsoft and its subsidiary Updraft for $500 million over patent infringement.

In its filing, Natsoft claims that Hexaware has misused confidential information and technology shared during their partnership to create competing platforms. Hexaware, in a regulatory filing, acknowledged the lawsuit, stating:

As per the information available on the website of the United States District Court, Northern District of Illinois, Eastern Division, we note that a complaint has been filed by Natsoft Corporation and Updraft LLC (‘Plaintiffs’) against the Company and its material subsidiary ‘Hexaware Technologies Inc’ in the United States District Court, Northern District of Illinois, Eastern Division, alleging infringement of certain patents and breach of contract. At present, the Company has not received any notice or formal communication from the US court or from the Plaintiffs in relation to the aforesaid proceedings.

This incident is not unprecedented; similar intellectual property (IP) infringement cases have emerged against Indian IT services firms in the past. For instance, Tata Consultancy Services (TCS), the largest services provider in India, was sued by Epic Systems Corporation in 2014, alleging that TCS had “stolen” its intellectual property. The lawsuit was filed against TCS and Tata America International Corporation.

Clash of the Titans

The recent lawsuit marks a significant clash in the industry. Natsoft’s allegations against Hexaware for the misuse of confidential information is indicative of the broader challenges faced by tech firms today. Additionally, Infosys is currently embroiled in a court battle with Cognizant over claims of stealing trade secrets.

Originally, the damages claimed in the TCS-Epic case amounted to $940 million, but in 2023, the United States Supreme Court upheld punitive damages of $140 million against TCS. Meanwhile, Infosys’s legal entanglement with Cognizant, which began in 2024, highlights ongoing tensions in the tech community. Analysts predict that IP disputes will continue to proliferate, especially in the age of artificial intelligence (AI).

Impact of AI on Litigation

Peter Bendor-Samuel, founder and executive chairman of Everest Group, observed that the rise of AI is prompting tech services firms to emphasize intellectual property, thereby increasing litigation between software and tech services companies. He noted, “AI is causing tech services firms to offer intellectual property, and hence litigation between software firms and tech services will increase. This means more tech services firms will sue other tech services firms.”

Additionally, Jaspreet Singh, partner and chief revenue officer at Grant Thornton Bharat, remarked that while patent litigation has historically centered around product-based tech giants, especially in the hardware, mobile, and semiconductor sectors, 2025 has seen a notable increase in lawsuits targeting IT services and consulting companies. These firms are increasingly offering proprietary digital platforms and cloud services.

The implementation of generative AI and large language models by legal teams has significantly accelerated the identification of potential infringements and prior art, broadening the scope of litigation activity. Moreover, as services firms continue to adopt patented technologies, there will be stronger patent-enforcement strategies in place.

The escalation of competition and the similarity of delivery platforms further contribute to the rising number of legal disputes in the IT services industry. As the landscape evolves, it appears that firms will need to navigate an increasingly complex web of intellectual property challenges.

ED Raids 14 Locations of Corporate Power in Maharashtra in Rs 4,037 Crore Bank Loan Fraud

Enforcement Directorate Raids Premises in Connection with Alleged Bank Loan Fraud

The Enforcement Directorate (ED) recently conducted raids at 14 premises of M/s Corporate Power Limited and individuals associated with the company, including its promoters Manoj Jayaswal, Abhijeet Jayaswal, and Abhishek Jayaswal, in connection with an alleged money laundering scheme linked to a Rs 4,037-crore bank loan fraud.

The operation, which took place on Tuesday, is expected to continue on Wednesday, as authorities delve deeper into the intricacies of the case. Notably, Corporate Power Ltd. is identified as a Special Purpose Vehicle of the Abhijeet Group, established in 2006 specifically for a power venture in Jharkhand.

This probe by the ED stems from an FIR filed by the Central Bureau of Investigation (CBI) in December 2022, citing sections 120-B, 420, and 471 of the Indian Penal Code, as well as sections 13(2) and 13(1)(d) of the Prevention of Corruption Act, 1988 against M/s Corporate Power Limited and its promoters/directors. The case was initiated based on a complaint from the Union Bank of India, which also spurred nationwide raids by the CBI in cities such as Nagpur, Mumbai, Ranchi, Kolkata, Durgapur, Ghaziabad, and Vishakhapatnam.

According to the CBI’s complaint, M/s Corporate Power Ltd. allegedly submitted manipulated project cost statements to obtain loans and misappropriated bank funds for personal gain. The illicit activities are said to have taken place from the financial year 2009 to September 30, 2013, resulting in the loan turning into non-performing assets (NPA) and an estimated proceeds of crime totaling Rs 4,037 crore.

During their investigation, the ED discovered that the Abhijeet Group had established a complex network of shell entities to facilitate the layering, integration, and utilization of the illicit funds. Additionally, charitable institutions were exploited for money laundering purposes, while dummy directors and dormant companies were employed for maintaining the intricate scheme further. The assets amassed from these illicit activities encompass various forms, including movable assets such as listed and unlisted shares, loans, advances, mutual funds, fixed deposits, and immovable properties.

In a significant development, the agency has obtained freezing orders to restrain fixed deposits, demat accounts, and mutual funds totaling Rs 205 crore. Furthermore, authorities seized Rs 55 lakh in cash during the search operations, and unencumbered immovable assets valued at Rs 50 crore, derived from the proceeds of the crime, have been identified.

This ongoing probe serves as a stark reminder of the complexities and implications associated with financial crimes, shedding light on the efforts undertaken by regulatory agencies to combat such illicit activities and hold the perpetrators accountable.