TCS Unveils Salary Hikes for 80% of Workforce Amid Strategic Overhaul

Image Source : The Financial Express

India’s largest IT services firm, Tata Consultancy Services (TCS), has announced a sweeping compensation revision covering nearly 80 percent of its global workforce. The wage hike, effective September 1, 2025, comes at a time when the company is simultaneously executing a strategic layoff of 12,000 employees. The dual move reflects TCS’s evolving approach to talent retention and future-readiness in a rapidly shifting tech landscape.

Key Developments from the Internal Memo

TCS will implement salary hikes for all eligible employees up to grade C3A and equivalent
The revision covers junior and mid-level staff, accounting for 80 percent of the workforce
The announcement was made via an internal email from CHRO Milind Lakkad and CHRO Designate K Sudeep
The hikes will be effective from September 1, 2025
The company has not disclosed the average increment, though last year’s hikes ranged from 4.5% to 7%

Strategic Context: Layoffs and Restructuring

While the salary hike is a welcome relief for many, it comes against the backdrop of a significant workforce reduction:

TCS plans to lay off approximately 12,000 employees, or 2 percent of its global headcount
The layoffs primarily affect mid- to senior-level managers whose skills are considered non-deployable in current projects
The restructuring is part of TCS’s broader initiative to become a “future-ready organisation”
Focus areas include AI deployment, new market entry, infrastructure modernization, and workforce realignment

This dual strategy of rewarding junior talent while trimming senior roles is aimed at protecting operating margins and aligning with evolving client demands.

Industry Implications and Competitive Signals

The announcement has sparked wider conversations across India’s IT sector:

Other IT majors like Cognizant and Infosys are reportedly reassessing their own compensation strategies
The move may set a precedent for performance-linked pay hikes amid cautious hiring and project delays
Analysts suggest the layoffs may create fiscal room for salary adjustments, especially for high-performing junior staff
The timing of the hike—after a stalled April cycle—signals cautious optimism despite macroeconomic headwinds

TCS’s decision could influence broader compensation trends across the industry, especially as companies grapple with AI-led disruptions and global trade uncertainties.

Employee Sentiment and Internal Messaging

The internal memo emphasized appreciation for employee contributions:

The email thanked staff for their “dedication and hard work”
It framed the hike as part of building “the future of TCS together”
The company reiterated its commitment to reskilling and redeployment initiatives for impacted employees

While the exact quantum of hikes remains undisclosed, the gesture is seen as a morale booster for junior staff navigating an uncertain tech job market.

Looking Ahead: What This Means for TCS and the Sector

The compensation revision reflects a strategic pivot:

TCS is prioritizing agility, cost-efficiency, and future-readiness over legacy staffing models
The company is investing in AI, automation, and next-gen infrastructure to stay competitive
Wage hikes for junior staff may help retain talent in a market where attrition and skill gaps are rising
The layoffs, though painful, are being positioned as necessary for long-term sustainability

As global tech demand remains subdued and client decision-making slows, TCS’s move may be a blueprint for balancing cost control with talent retention.

Conclusion

TCS’s announcement of salary hikes for 80 percent of its workforce, juxtaposed with a major layoff plan, marks a defining moment in the company’s transformation journey. It underscores the delicate balancing act between rewarding performance and recalibrating for future growth. For employees, the message is clear: adaptability, skill relevance, and performance will shape the path forward.

Source: News18, Business Standard, IndiaTV, The Hindu Business Line