Problem with TCS. & Why it is not going to go away

Well the problem starts from very top. The CXO compensation. The TCS CEO get around 0.03% of TCS profits(NOT revenue) as commision. COO, CFO etc too get from 0.01%to 0.03% of TCS profits as their commision (reference: TCS annual reports)

This is very huge chunk of their salary. In CEO's case Almost 80%+ TCS CEO salary is this comission. (In comparison, even though infy CEO gets 80cr as salary, his variable pay was 23cr. Almost 29% of salary) e.g. Rajesh gopinath salary in FY2018 was around 12 cr. Out of which, commision(0.03%) from TCS profit was 10 cr.

So if the TCS CXOs want to increase their salary, they have to increase the commission & for that purpose the the profit of TCS. To do that, they keep doing cost cutting. At the price of letting the talent go. At the cost of killing innovation. They assign the goal to their reportee around maximizing the profits. NOT innovation. & This cost cutting culture replicated all around.

This worked well during Rajesh's period. His salary grew from 12cr to 30 cr by 2023(when he resigned.) almost by 3X. Mind you, TCS revenue did not increase by 3 fold during this period. But the profits grew by that much. & To do that, almost every COE team which was on SWON was cut off. Everybody had to be on WON. & TCS talent & innovation was hurt during this time.

Eventually it came back to bite TCS. GenAI just expedited it. By that time, Rajesh was gone.

But did TCS learn? Hell no! Even as per last year annual report, Krithi's comission was 23cr, out of salary of 26cr.

If salary structure at the CXO level is rigged to the company profits only, they won't have any motivation to invest in next gen big ideas or the top tech talent.

Unless this salary structure is changed to link some part with the revenue, the CXOs won't drive the innovation or take care of the talent.

Just by reducing employees on bench or strict policies, this condition is not going to improve unless the root cause of the CXO compensation is addressed properly.