After months of uncertainty, Tata Consultancy Services (TCS) has finally announced salary hikes for its employees, bringing some much-needed relief to its workforce. The IT giant confirmed that increments, delayed since April, will now be effective from September 1, 2025.
According to company insiders, nearly 80% of TCS employees have received salary increases in the range of 4.5–7%, while top performers have been rewarded with double-digit hikes. Though modest compared to past years, the move reflects TCS’s attempt to balance employee morale with the financial pressures facing the global IT services sector.
What the Salary Hike Means for TCS Employees
The salary revision comes at a time when employees had been waiting for clarity for several months. Traditionally, TCS announces annual pay hikes in the first quarter of the financial year, effective from April 1. However, this year the announcement was delayed due to weak demand, restructuring initiatives, and uncertain client spending in major markets.
The company’s decision to implement hikes from September 1 has been met with a mix of relief and cautious optimism among employees. While the increments are welcome, they remain lower than historic levels, highlighting the challenging business environment for IT services firms.
For context:
- FY22: Average hikes were 10.5%, the highest in recent years.
- FY23: Employees received 6–9% raises.
- FY24: The increment range narrowed to 4.5–7%, reflecting cost pressures and slower revenue growth.
This year’s hikes match last year’s band but remain significantly lower than the double-digit increases of FY22.
Top Performers See Double-Digit Increases
Despite the modest overall band, star performers at TCS have received double-digit hikes. This strategy underlines the company’s efforts to retain high-value talent in a competitive industry where skilled professionals in artificial intelligence, data analytics, and cloud technologies are in high demand.
A TCS insider revealed that while a majority of employees will see hikes in the 4.5–7% range, “a small percentage of top talent in business-critical roles” received much higher raises.
Why Were the Hikes Delayed?
The delay in salary hikes is closely linked to the restructuring exercise TCS is currently undergoing. The company is realigning itself to become “future-ready,” focusing on emerging technologies, digital transformation, and artificial intelligence.
At the Q1 earnings briefing in July, Chief Human Resources Officer (CHRO) Milind Lakkad had stated that salary decisions would be finalized later in the year, depending on business visibility. This delay raised concerns among employees, but the announcement now provides some clarity.
Restructuring and Job Rationalisation
Alongside hikes, TCS is also in the middle of a major workforce restructuring plan. The company has confirmed that around 2% of its global workforce will be impacted this year as part of this process.
With TCS’s global headcount of nearly 600,000 employees, this translates into almost 12,000 jobs at risk, mostly in mid and senior roles. The company is actively reskilling and redeploying employees into emerging business areas, but some redundancies are expected.
This dual development — modest hikes for most, and potential job losses for some — has created an atmosphere of cautious optimism mixed with anxiety among employees.
Competitive Landscape: How Are Peers Responding?
TCS is one of the first major Indian IT firms to announce pay hikes this year, giving it a slight edge in employee retention compared to rivals.
- Cognizant: Announced increments in August, but they will take effect only from November 1, 2025.
- Infosys and Wipro: Yet to announce hikes for FY25, expected later this fiscal.
- HCLTech: Has hinted at workforce rationalisation, though the company clarified that the bulk of the impact will be felt outside India.
Given the global slowdown in IT spending, analysts expect most companies to follow a conservative approach toward salary hikes this year.
Why the IT Sector Is Struggling
The challenges facing TCS are not unique. The broader IT services industry is dealing with:
- Weak global demand: Major clients in the US and Europe are cutting discretionary IT spending.
- Slowing deal flow: Large transformation contracts are fewer and face longer approval cycles.
- Margin pressures: Rising operational costs and restructuring investments are weighing on profitability.
- AI disruption: Companies are investing heavily in AI tools and automation, which is reshaping workforce requirements.
Analysts note that while demand may remain muted in the short term, long-term prospects for IT services remain strong, especially with digital transformation, AI integration, and cloud adoption accelerating worldwide.
What This Means for TCS Employees
For TCS employees, the latest announcement offers short-term relief after months of speculation. However, the delayed rollout, modest increments, and simultaneous workforce restructuring highlight the tough times ahead.
The key takeaways for employees are:
- Salary stability: Most employees will benefit from modest hikes, ensuring income growth despite industry challenges.
- High performers rewarded: Double-digit raises for top performers reinforce the company’s focus on retaining talent in critical areas.
- Job uncertainty: With 12,000 roles likely to be rationalised, employees in mid-to-senior levels may face uncertainty unless they adapt to new technology demands.
- Reskilling critical: Employees skilled in AI, automation, cloud, and cybersecurity stand to benefit the most in the new workforce model.
Looking Ahead: Can TCS Regain Growth Momentum?
Despite near-term challenges, analysts remain cautiously optimistic about TCS’s long-term outlook. The company continues to invest in AI-powered solutions, digital infrastructure, and global expansion, all of which could help drive growth in coming years.
The modest pay hikes, coupled with job restructuring, are part of TCS’s strategy to remain competitive and future-ready in a rapidly evolving IT landscape.
For now, the announcement of hikes may restore employee morale, but the real challenge for TCS will be to balance cost pressures with talent retention as the industry navigates uncertain global demand.
