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
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TCS will implement salary hikes for all eligible employees up to grade C3A and equivalent
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The revision covers junior and mid-level staff, accounting for 80 percent of the workforce
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The announcement was made via an internal email from CHRO Milind Lakkad and CHRO Designate K Sudeep
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The hikes will be effective from September 1, 2025
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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:
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TCS plans to lay off approximately 12,000 employees, or 2 percent of its global headcount
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The layoffs primarily affect mid- to senior-level managers whose skills are considered non-deployable in current projects
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The restructuring is part of TCS’s broader initiative to become a “future-ready organisation”
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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:
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Other IT majors like Cognizant and Infosys are reportedly reassessing their own compensation strategies
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The move may set a precedent for performance-linked pay hikes amid cautious hiring and project delays
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Analysts suggest the layoffs may create fiscal room for salary adjustments, especially for high-performing junior staff
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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:
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The email thanked staff for their “dedication and hard work”
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It framed the hike as part of building “the future of TCS together”
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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:
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TCS is prioritizing agility, cost-efficiency, and future-readiness over legacy staffing models
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The company is investing in AI, automation, and next-gen infrastructure to stay competitive
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Wage hikes for junior staff may help retain talent in a market where attrition and skill gaps are rising
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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
