Tata Consultancy Services (TCS) has announced a 4.5–7% salary hike for most employees, effective 1 September 2025, following a five-month delay in its annual appraisal cycle. The decision affects nearly 80 percent of its global workforce.
Details of the Salary Hike
The new pay increases cover employees from entry-level staff up to grade C3A, according to a company-wide communication reviewed by Reuters. Top performers were rewarded with increments exceeding 10 percent, but senior employees in grades C3B and above were excluded.
The hikes are not retrospective, meaning workers will not receive back pay for the months between April and September. Industry analysts noted that this increment range is the lowest in four years, compared to 6–9 percent in FY2023 and double-digit raises in FY2022.
Workforce Impact
The announcement coincided with a restructuring exercise that resulted in the layoff of about 12,000 mid- and senior-level employees, or 2 percent of the total workforce. In an internal memo seen by The Economic Times, TCS described the move as necessary to build a “future-ready organization.”
Employee sentiment, however, has been mixed. Some staff expressed disappointment at what they viewed as modest increases. “I got only 1% increment,” said one employee anonymously to the Times of India, reflecting frustration within parts of the workforce.
Economic and Industry Context
The information technology (IT) services sector in India is facing a subdued global demand environment. Client spending has slowed in key markets such as the United States and Europe, prompting firms to curb costs.
TCS reported an attrition rate of 13.8 percent as of June 2025, the highest in two years. Analysts suggest that the salary hikes may be aimed at controlling further attrition while balancing profitability in a challenging economic climate.
“This year’s increment is clearly cautious,” said Shivendra Singh, vice-president at the industry group NASSCOM. “Companies are under pressure from both rising costs and weak international demand.”
Comparison With Competitors
Other major Indian IT firms, including Infosys and Wipro, are also facing similar challenges. Infosys has yet to announce its increment plan for 2025, while Wipro rolled out a more conservative 3–6 percent increase earlier this year, according to industry reports.
Broader Implications for Employees
While the salary hikes will bring relief to many employees after months of uncertainty, the exclusion of senior staff and the absence of back pay have raised concerns about equity within the workforce.
“The fact that senior roles are excluded suggests a focus on retaining junior talent, which forms the delivery backbone of the company,” said Rohit Kumar, a human resources consultant at Deloitte India.
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Conclusion
TCS’s 4.5–7 percent salary hike underscores the balancing act facing India’s largest IT services company: retaining talent in a competitive labour market while managing costs in a subdued global economy. The move highlights broader industry pressures as firms navigate slower growth, rising attrition, and structural shifts in client demand.
