Daybreak - IT jobs are being remade. Accenture and TCS are the first dominoes to fall

Episode Date: July 26, 2026

When Accenture employees in Pune walked into their appraisal meetings in May, they expected the routine conversations. Instead, they found out things would be done differently this year. They did get their full salary hike. But not the way it was done up until now. Half went into the base salary. The other half arrived as a lump sum in June. On paper, nothing was lost. In practice, though, every future raise now compounds on a smaller number. And that's what affects gratuity, loan eligibility, and long-term salary growth. Even TCS has done something similar with bonuses. Both are a consequence how the IT sector has been doing. It's market value has fallen by nearly Rs 9 lakh crore in five years. Which means, its likely the restructuring has only just begun.Tune in.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

In mid-May, when the Accenture employees in Punei walked into a meeting with their managers, they may have expected the same old annual appraisal discussion. Instead, they were told that things would be done differently this year. The IT Services giant has changed how it awards salary hikes for all its employees across the world, not just in Pune. Instead of breaking up the full hike across their monthly salaries, Accenture is now splitting it into two. parts. Half the hike will be added to the base salary like before. The other half was paid as a lump sum on 30th June this year. An Accenture employee told my colleague the Ken reporter

Di Banjali Biswas that if the employees would have been told about the change just two or three months in advance, they could have planned better and decided whether to stay or look for other jobs. The thing is, on paper, this does look like a win, especially since the structure would mean that you get some quick cash in hand after years of frozen hikes. But most employees are still worried about what it means in the long term. Because here's the catch. Since only half the race gets added to the base salary, each future race is calculated on a smaller number.

And that compounds and decreases the salary growth year after year. Plus, base salary isn't just a number on a pay slip. It determines things like gratuity, Provident Fund contributions and even loan eligibility. Now, Accenture isn't a loan in this kind of restructure. Even TCS recently shifted a part of its quarterly bonus to an annual payout instead, obviously making it much costlier for employees to quit mid-year. On top of that, companies are also measuring employee performance based on their in-office

attendance and the number of projects they complete. So why is all of this happening right now? Well, to put it quite simply, IT firms are struggling. For example, Accenture's stock crashed nearly 20% in June after the company missed its earnings targets. It even posted a 2% decline in its new services bookings. The ripple effect has ended up hitting Indian IT companies as well. Of course, a lot of this is owed to AI tripping away

at the old labour supply model that these companies were built on. The pressure to deliver projects faster and cheaper is only increasing, and the top players have lost nearly 9-0 crore rupees in market value over the past five years. There's also India's new labour courts, which were rolled out in November 2025. These are also pushing MNCs with headquarters in India to increase their employees' base pay, so restructuring hikes like this ends up helping companies manage both finances and their employees, which means it's probably only going to be a matter of time before the rest of the industry follows suit. But in all of this, for the IT employees who make up a big chunk of India's roughly 6 million tech workforce,

the basic promise of a salary job is starting to look shaky. Welcome to Daybreak, a business podcast from the Ken, and your host, Retriever. and every day of the week, my co-host Nika Sharma and I will bring you one new story that is worth understanding and worth your time. Today is Monday, the 27th of July. In the short term, nothing really changes for the Accenture employees. By the end of the year, they will still get their full salary hike. The real impact shows up later in how future races get calculated. The effect of not adding the entire hike amount to an employee's take-home salary compounds from the

second year onwards. Now, in an internal memo, Accenture does say that promotions are going to be safe. The full amount will be added to the base salary. But the new structure still affects their future growth because base salary is what companies look at when they decide the next promotion or salary slab. It's also what other companies look at when employees try to switch jobs. The Accenture employee, I quoted earlier, explained it like this. It's difficult to convince other companies HR that your real hike was 10% when the papers only show 5%. Then there's also the case of gratuity and Provident Fund payouts. Now, gratuity is calculated on the last drawn salary and excludes variable pay.

So, a smaller base after years of reduced compounding would mean a smaller payout. BF Matho is a little bit more nuanced. Contributions are based on percentages of the base salary. But the mandatory 12% only applies up to 15,000 a month unless employees opt for more. Most IT salaries are well above that level. So PF contributions likely won't change that much. Obviously, the answer to escape this kind of reduced compounding would be to switch jobs. But that's harder than it sounds, especially now.

Layoffs and hiring slowdowns have put employees at a disadvantage. Sumit Kumar, the vice president of Everest Group, a research firm, told Di Banjali that the kind of hikes that IT employees used to negotiate of about 25 to 30 percent have dropped to 15 to 20 percent. Now, companies are also making it harder to leave. TCS used to pay bonuses on a quarterly basis. Now, the restructuring makes it once a year. If employees leave partway through the year, they lose the entire bonus, not. just a part of it. So, employees stay, especially as the payout time draws near. It's almost like a golden handcuff. There is a financial benefit of sorts, yes, but they're still stuck. Now,

this works out in favour of a company like TCS very well, because over a full year, more people end up quitting early. It could be for a new job or a move or even because of burnout. And of course, Every early exit means that there's one less share of the bonus pool for TCS to pay out. And what this basically does is turns what should be lifestyle choices for employees into forced decisions. When bonuses aren't guaranteed anymore, people stop planning their life around it. So things like home loans, weddings, a child's education, all of it gets more difficult to commit to. Kumar told Devanjali that the certainty of a stable role and predictable income has pretty much gone down.

But even then, there are bigger problems. More on this in the next segment. The thing is, banks barely count variable pay when assessing loan eligibility. What matters is the monthly salary shown on the last three to six pay slips. So, when a chunk of the hike moves out of that monthly number and into a lump sum, it can affect the amount and employee qualifies to borrow. Now, the impact isn't dramatic yet. But a research analyst told Di Banjali that banks have started noticing this.

They're increasingly aware that many IT employees are or will be affected by AI layoffs. And it's making them more cautious about giving out loans. This has cascading effects that go beyond just loans as well. Until major players like Accenture, TCS and WIPRO start expanding their headcount again. again, which would signal that AI isn't delivering the expected returns, employees have to assume that more restructuring is coming their way. Many feel like there is an axe hanging over the heads, uncertain about when it might fall. Of course, like I mentioned earlier, that kind of uncertainty is also changing the way employees plan their lives.

Kumar told Di Banjali that with less long-term predictability, employees are being cautious about big-ticket financial commitments, especially high-value EMIs. Instead of committing to long-term assets, people are choosing to stay liquid because no one knows whether their incomes are stable. What's adding to the pressure is that many companies have shifted to attendance-based performance bonuses since the pandemic. That's pushed up how much employees spend on rent, fuel and commuting, just to show up and qualify for a bonus.

The General Secretary of Unite, a labor union representing IT and related industrial industry, employees said that employees should ideally be judged on the value and outcome they have created. But increasingly, when companies are deciding who gets rewarded, they are also weighing in return to office compliance and how much time an employee spends unassigned to a project. Stay tuned. The IT sector is under a lot of pressure to improve their performance. The Nifty IT index hit a three-year low in June, after Accenture's weak earnings signaled a continued downturn in global markets.

These companies depend on long-term client contracts to stay afloat. But as fewer such deals come in, they have less visibility into what the next few quarters will look like. Kumar explained to us that a single quarter is too narrow when it comes to deciding bonuses, especially with less predictable client deals. A full financial year view lets companies align rewards with actual business performance across the cycle. And holding the money longer also gives companies more flexibility to manage cash. There's another reason why the restructuring makes sense. You see, an annual payout

signals that bonuses are discretionary and not guaranteed. And companies can benefit from that flexibility right now with the kind of pressure margins are under. Kumar told us that communicating a partial bonus of, say, 70% is never easy, but doing it once a year is less. disruptive than doing it every single quarter. And then there's the simple math. If an employee's compounding salary keeps shrinking over the years, the company's bottom line benefits. The restructuring is also helping companies handle India's new labor codes,

which require base pay to be at least half of an employee's salary. The codes also treat out-of-state staff as interstate migrant workers, and that means large IT firms which employ tens of of thousands of people across India now have to fund benefits like paid trips to their hometowns. The thing is, data from the last five years annual reports show that employee benefit costs already make up 65 to 75% of total expenses at companies like TCS, WIPRO and Inphysis. Ghanindra, a partner at a corporate law firm, told Di Banjali that for hundreds of thousands

of employees, this has a huge financial impact and it's a logistical nightmare. to track. And on top of all this, there's the pressure that AI adds, except it's not exactly in the way that companies expected. The Secretary of the Union explained that the tech isn't replacing humans as effectively as companies once believed. The real value lies in tailoring AI to specific business needs. So, jobs are essentially getting cut to reduce costs and divert investment toward building more data centers. But even as high strength for most employees, employees, the C-suite level pay keeps increasing. Kumar said that the boards are tracking what CXOs deliver on AI implementation.

The logic is that if they don't pay a CEO well today, it could prove costlier tomorrow. But obviously, it would also sting for a software engineer to watch their own compensation flatline at the same time. It's basically a loose-lose situation. Companies manage their cost pressure and employees bear the brunt. But it's not an even trade. One side is losing the ability to plan for the future far more than the other. Daybreak is produced from the newsroom of the Ken India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings.

A full subscription offers daily long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the Ken.com and click on the red subscribe button on the top of the Ken website. Today's episode was hosted and produced by my colleague Rachel Virgis and edited by Rajiv Sien.