Shares of Tata Consultancy Services (TCS) rose nearly 1% in opening trade on Thursday, in sync with the broader market, after the IT major clarified that it will be paying 100% variable pay to its employees for the April-June quarter of the current financial year (Q1 FY23). The clarification came in wake of recent reports which claimed that TCS, the country’s largest software exporter, has delayed the payment of variable pay for many senior employees for the first quarter by a month.
“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% VA is being paid for Q1,” TCS said in a statement.
Meanwhile, reports suggest that rivals Infosys and Wipro have cut or halted variable costs for their employees, citing margin pressure.
Bengaluru-headquartered Infosys has lowered the average variable payout of employees to about 70% for the June quarter due to the impact on margins in the backdrop of rising employee overhead costs. “The margin impact in the current quarter has reflected on the performance bonus for this cycle,” the company reportedly told its employees over email.
The first quarter earnings report (Q1 FY23) by IT majors - TCS, Infosys, and Wipro – showed that their margins contracted on a yearly basis due to wage hikes and the continued rationalisation of employee costs amid high attrition despite the industry continuing to add record freshers. The margins were also impacted due to an uptick in travel expenses as the economy opens up and visa-related costs.
Snapping a three-session losing streak, TCS shares opened higher at ₹3,270.20, against the previous closing price of ₹3,255.35 on the BSE. In the first hour of the day’s trade, the IT heavyweight gained as much as 0.75% to hit a high of ₹3,279.95. In comparison, the BSE benchmark Sensex was trading 333 points, or 0.56%, higher at 59,418 levels, with all constituents, barring HCL Tech, flashing in green.
With a market capitalisation of ₹11.93 lakh crore, share of the country’s second most valued firm currently trades 19% lower than its 52-week high of ₹4,045.50 touched on January 18, 2022, while it hit a 52-week low of ₹2,953 on July 15, 2022. The large cap IT stock has given a negative return of 11% in the last one year, while it has fallen more than 14% in the calendar year 2022. The counter has gained 3% in the past one month, while it dropped 4.5% in a week.
In a separate development, TCS in an exchange filing said it has topped Microsoft’s cloud partner program with a record number of advanced specialisations. The IT major has now achieved 17 Microsoft Advanced Specialisations, setting a new record within Microsoft’s cloud partner program.
“TCS’ dedicated Microsoft Business Unit and its 50,000 trained professionals have demonstrated technical and delivery expertise on Microsoft Cloud, earning TCS a long list of advanced specialisations like AI and Machine Learning in Microsoft Azure, Analytics on Microsoft Azure, Custom Solutions for Microsoft Teams, Data Warehouse Migration to Microsoft Azure, DevOps with GitHub on Microsoft Azure, Kubernetes on Microsoft Azure, Linux and Open Source Database Migration to Microsoft Azure, Microsoft Azure VMware Solution, Modernization of Web App to Microsoft Azure, Teamwork Deployment, and many more,” it said.