TCS salary hikes for announces 80% of its employees from September 1, 2025, while laying off 12,000 mid- and senior-level staff. Find out who’s getting a raise and why the layoffs are happening.
TCS Salary Hike Amid Strategic Layoffs
In a significant development in the Indian IT industry, Tata Consultancy Services (TCS) has announced salary hikes for a large portion of its workforce—about 80%—effective from September 1, 2025. The announcement comes at a time when the company is also moving forward with layoffs of 12,000 employees, primarily at mid- and senior levels.
This dual move has raised eyebrows in the tech world, indicating a massive internal restructuring at India’s largest IT services firm.
Who Will Receive the Salary Hike?
According to an internal communication circulated by the TCS leadership team, employees up to grade C3A will be eligible for the compensation revision. This group includes freshers and junior to mid-level staff, who together account for nearly 80% of TCS’s global workforce.
In the email, Chief Human Resources Officer (CHRO) Milind Lakkad and CHRO Designate K Sudeep expressed gratitude to employees, stating:
“We are pleased to announce a compensation revision for all eligible associates in grades up to C3A and equivalent, covering 80% of our workforce. This will be effective from September 1, 2025. We thank each one of you for your dedication and hard work as we build the future of TCS together.”
How Much is the Salary Increase?
While TCS has not revealed the average percentage hike this year, it’s worth noting that in the previous cycle, salary increments ranged from 4.5% to 7%, with top performers receiving double-digit raises. The company has kept this year’s figures confidential, possibly due to broader economic uncertainties.
What’s clear, however, is that the hike targets the company’s core talent pool—those in the early and mid stages of their careers—possibly to retain them amid growing competition and global cost pressures.
Who is Being Laid Off — and Why?
Alongside the salary hike, TCS has confirmed that it will be letting go of approximately 12,000 employees in 2025. This number represents around 2% of its total global headcount, and the cuts are primarily aimed at mid- to senior-level roles that are no longer aligned with the company’s evolving strategic goals.
TCS issued a statement highlighting its ongoing transformation:
“TCS is on a journey to become a future-ready organisation. This includes strategic initiatives like investing in new technology, exploring new markets, deploying AI at scale, and realigning our workforce model.”
As part of this transformation, the company noted that redeployment and reskilling initiatives have already been implemented. However, certain roles—especially those that are harder to deploy—will be phased out, resulting in workforce reductions.
Delay in Salary Hike Cycle This Year
Traditionally, TCS rolls out annual salary hikes in April. However, this year saw a delay in the increment cycle, primarily due to macroeconomic challenges, client decision-making delays, and slow revenue growth.
TCS’s June 2025 quarter performance highlighted these challenges:
- Revenue dropped 3.1% year-on-year (in constant currency)
- Sequential fall of 3.3%
- Major client deals, such as the one with BSNL, ended, adding to the financial strain
Despite this, the company’s decision to move ahead with hikes—albeit delayed—demonstrates a commitment to retaining talent and boosting morale in uncertain times.
Strategic Focus: Young Talent and AI Transformation
Industry insiders believe that TCS is now focusing on reshaping its workforce by promoting young, agile, and tech-savvy talent over legacy roles. The growing influence of AI, automation, and data science has prompted companies to re-skill or replace traditional roles.
With this salary hike, TCS is clearly aiming to retain promising early-career professionals, while its layoffs reflect a push toward leaner, AI-ready operations.
What About Other IT Firms? A Mixed Picture
TCS isn’t the only IT major navigating this balancing act. Other big players like Infosys and Wipro are also showing caution.
Infosys CEO Salil Parekh recently commented on the topic of wage hikes, saying:
“We concluded our compensation increases for Q4 and Q1 of the last fiscal year. Now that the cycle is complete, we are evaluating the timing for the next round. There are no changes planned for now.”
The cautious tone from Infosys and similar signals from other IT firms suggest that the entire industry is in a state of flux, trying to adjust to the post-COVID reality, AI disruptions, and global economic uncertainties.
What This Means for Employees
For junior and mid-level employees, especially freshers who joined in the last 2–3 years, this is welcome news. Despite industry challenges, the salary hike reflects the company’s faith in its future talent pool.
However, mid to senior-level professionals may find the situation more uncertain. With AI taking over routine tasks, and clients demanding more for less, experienced roles are being re-evaluated. For many, upskilling or transitioning into AI-relevant roles may be the only way forward.
TCS’s Workforce Realignment Strategy: A Closer Look
The layoffs and hikes together indicate that TCS is not just reacting to external pressures but is proactively reshaping its internal structure. Here’s what the strategy appears to focus on:
| Strategy Element | Key Focus |
|---|---|
| Talent Retention | 80% workforce receiving hikes |
| AI Adoption | Emphasis on automation and tech |
| Cost Optimization | Phasing out redundant senior roles |
| Future-Proofing | Investments in new tech & markets |
| Agile Restructuring | Realignment of roles and functions |
Expert Opinion: What Industry Analysts Say
Market analysts believe this is just the beginning of a larger wave of realignments in the Indian IT sector. As generative AI, cloud computing, and cybersecurity become mainstream, companies like TCS are under pressure to adapt quickly—or risk falling behind.
TCS’s decision to reward performance and potential over seniority could become a blueprint for others navigating this disruptive phase.
A Transformative Year for TCS and Indian IT
TCS’s 2025 salary hike and layoff strategy marks a major shift in how Indian IT firms are adapting to modern demands. While the 80% of employees receiving hikes can look forward to improved compensation, the 12,000 employees being let go will need to evaluate their next steps in an evolving industry landscape.
This move reflects a broader reality in the tech world: adaptability is the new job security. As AI and automation reshape how companies function, only those prepared to evolve will thrive.
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