TCS employ to lose 1.5% of total salary

• Employees of Tata Consultancy Services will lose about 1.5 per cent of the total cost to company (CTC) salary for the next two months, as the company failed to meet its internal economic value added (EVA) target of Rs 376 crore for the first time.
• EVA is calculated as net operating profit after taxes minus a charge of the opportunity cost of the capital invested. According to the income structure of most TCS employees, 30 per cent of their salary is variable in nature. This variable component is paid at the beginning of the quarter, in anticipation that the company will achieve a pre-set EVA target. In the third-quarter, however, the company was unable to achieve its goal owing to various factors such as higher onsite component of revenues, lower utilisation rates, rupee appreciation and several one-time taxation issues.
• If the dip is extended beyond the quarter, it could have a negative impact on employee sentiment and thereby spike attrition for the company, say industry insiders. Already the move has been condemned on various user-generated content such as blogs and forums.