Tata Consultancy Services Announces Salary Hikes Amid Industry Challenges
In a significant move, Tata Consultancy Services (TCS), India’s largest IT services firm, has announced its annual salary increments after a five-month delay. The company will implement an average salary increase of 4.5% to 7% for the majority of its employees, effective September 1, 2025. This decision comes in the wake of a challenging business environment that has affected the IT sector, particularly TCS’s financial performance.
Context of the Salary Hikes
The salary increments pertain to the financial year that concluded in March 2025. According to sources familiar with the matter, high-performing employees may see increases exceeding 10%. However, this year’s average hike is notably lower than those offered in previous years. For instance, the average salary increase for the fiscal year 2024 was also in the range of 4.5% to 7%, while employees enjoyed hikes of 6% to 9% in FY23 and a substantial 10.5% in FY22.
Typically, TCS rolls out salary increments in April, but this year’s delay reflects the broader economic challenges facing the IT industry. The company has been grappling with muted revenue growth, prolonged decision-making processes from clients, and concerns regarding the impact of tariffs and advancements in artificial intelligence.
Employee Impact and Scope of Increments
The latest salary adjustments will primarily benefit employees at the fresher level up to grade C3A, which encompasses junior to mid-level positions. Notably, senior-level employees in higher bands (C3B, C4, C5) will not receive any increases in this round. An internal email from TCS’s Chief Human Resources Officer, Milind Lakkad, and CHRO designate K Sudeep, confirmed that approximately 80% of the workforce would be eligible for these hikes.
Despite the positive news of salary increments, TCS is simultaneously undergoing a restructuring process that includes laying off around 2% of its workforce, which translates to over 12,000 mid- and senior-level employees. As of the end of June, TCS’s total employee count stood at 613,069, indicating a significant workforce reduction amid the ongoing fiscal year.
Broader Industry Trends
The current salary hikes occur against a backdrop of caution within the IT sector. Major Indian IT firms are facing challenges such as slow revenue growth and a cautious approach from clients, which has led to delays in project approvals. The introduction of a new bench policy by TCS in June, which allows employees a maximum of 35 days annually without project allocation, further underscores the company’s efforts to manage its workforce effectively. The target for each employee is set at 225 billed business days per year.
Additionally, TCS has implemented a freeze on lateral hiring at mid- and senior levels, alongside trimming hundreds of benched staff in key cities like Chennai, Hyderabad, Pune, and Kolkata. The company has also faced criticism for delays in onboarding around 600 lateral hires, raising concerns among employees and labor unions.
Employee Sentiment and Union Response
The recent workforce developments have sparked pushback from employees and labor unions, who are increasingly vocal about their concerns. TCS’s actions have drawn scrutiny from the Ministry of Labour and Employment at the national level, as well as from Karnataka’s labor department. The situation highlights the delicate balance that TCS must maintain between managing its workforce and addressing employee concerns amid a challenging economic landscape.
Conclusion
Tata Consultancy Services’ announcement of salary hikes, while a positive development for many employees, is tempered by the broader challenges facing the IT industry. The company’s decision to implement these increments amid layoffs and hiring freezes reflects the complexities of navigating a rapidly changing business environment. As TCS and other IT firms adapt to these challenges, the focus will remain on how they balance employee satisfaction with operational efficiency in the coming months.
