TCS Rolls Out 4.5–7% Salary Hikes for 80% of Workforce Amid Sector Headwinds
TCS’s 2025 salary hike rollout is emblematic of the delicate balancing act facing IT firms today—between cost control and employee engagement, AI disruption and delivery continuity, and short-term optimization and long-term resilience.
Mumbai, India | September 2, 2025 — Tata ConsuServices (TCS), India’s largest IT services firm, has announced annual salary hikes ranging from 4.5% to 7% for a majority of its employees, effective September 1, 2025. The move, while modest compared to previous years, signals a strategic effort to retain talent and stabilize morale amid a turbulent global IT landscape.
The increment letters were dispatched late Monday evening, ending a five-month delay in the company’s usual April compensation cycle. The hikes apply to employees up to grade C3A, encompassing freshers, junior staff, and mid-level professionals—collectively representing approximately 80% of TCS’s global workforce.
Key Highlights
| Category | Details |
|---|---|
| Effective Date | September 1, 2025 |
| Hike Range | 4.5% to 7% (10%+ for top performers) |
| Coverage | ~80% of workforce (Grades up to C3A) |
| Excluded Bands | C3B, C4, C5 (mid-senior and senior leadership) |
| Retrospective Payment | Not applicable |
| Payroll Reflection | September 2025 cycle |
| Attrition Rate (June Quarter) | 13.8% |
| Workforce Reduction (August) | ~12,000 employees (~2% of total headcount) |
| Lateral Hiring Status | Suspended for mid and senior levels |
Context: A Cautious Step in a Shifting Landscape
The current hike band—4.5% to 7%—marks the lowest increment range in four years. In FY22, TCS offered average hikes of 10.5%, followed by 6–9% in FY23. The subdued revision reflects the cautious sentiment prevailing across the IT sector, driven by:
- Sluggish revenue growth
- Client hesitancy in long-term contracts
- AI-led transformations disrupting traditional delivery models
The salary revision corresponds to the fiscal year ending March 2025 and will not be paid retrospectively. Employees will see the revised compensation reflected in their September payroll.
Strategic Focus: Retention Over Expansion
TCS’s decision to concentrate hikes on lower and mid-level employees is seen as a retention strategy, especially as the company reported an attrition rate of 13.8% in its June quarter earnings—slightly higher than previous quarters.
“The hikes may be modest, but they’re targeted. Delivery teams are the backbone of our operations, and this move is about sustaining that core,” said a senior HR executive familiar with the internal deliberations.
Notably, employees in bands C3B, C4, and C5—typically comprising mid-senior and senior leadership—have been excluded from this round of hikes.
Parallel Restructuring: Cost Optimization in Motion
The salary hike announcement comes amid significant workforce restructuring. In August 2025, TCS confirmed plans to reduce its headcount by approximately 2%, impacting over 12,000 mid- and senior-level employees.
Additionally, the company has:
- Suspended lateral hiring for mid and senior levels
- Revised bench guidelines, allowing employees 35 non-project days annually
- Set a target of 225 billable days per year
These measures are part of a broader effort to optimize costs and improve utilization in response to a challenging business environment.
Internal Communication: Balancing Discipline with Engagement
In an internal email dated August 6, Chief Human Resources Officer Milind Lakkad and CHRO-designate K Sudeep wrote:
“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 1st September 2025.”
The message underscores TCS’s intent to balance cost discipline with employee engagement, even as the company navigates a volatile global IT landscape.
Expert Take: A Calculated Move
Industry analysts view the move as a calculated response to macroeconomic pressures and internal restructuring.
“TCS is threading a fine needle—acknowledging employee expectations while staying fiscally conservative. The exclusion of senior bands and the timing of the hike suggest a prioritization of delivery continuity over leadership expansion,” said Radhika Mehta, Senior Analyst at TechPulse India.
Historical Comparison: Salary Hike Trends at TCS
| Fiscal Year | Average Hike Range | Notes |
|---|---|---|
| FY22 | 10.5% | Post-pandemic recovery phase |
| FY23 | 6–9% | Inflationary pressures and global slowdown |
| FY24 | Delayed | No formal announcement due to restructuring |
| FY25 | 4.5–7% | Lowest in four years; strategic targeting |
Employee Sentiment: Relief, But Mixed Reactions
While the announcement has brought relief to many awaiting compensation updates, reactions across internal forums have been mixed.
- Positive sentiment among junior employees who received hikes above expectations
- Disappointment among mid-senior staff excluded from the revision
- Concerns about long-term career progression and internal parity
“It’s good to see some movement after months of silence. But the exclusion of higher bands raises questions about future growth,” said a mid-level project manager based in Bengaluru.
Sector-Wide Implications: A Bellwether for IT Firms?
TCS’s move is likely to set the tone for other IT majors such as Infosys, Wipro, and HCLTech, many of whom are grappling with similar challenges:
- AI disruption in traditional service lines
- Client budget freezes in Europe and North America
- Talent retention amid rising attrition and global mobility
“This isn’t just about TCS. It’s a signal to the entire sector that cost discipline is back, and compensation strategies will be more surgical than sweeping,” noted Mehta.
Next: Monitoring Morale and Utilization
As TCS enters the second half of FY25, key metrics to watch include:
- Utilization rates post bench policy revision
- Attrition trends in Q3 and Q4
- Client renewals and deal wins
- Internal mobility and upskilling initiatives
The company is expected to double down on internal capability-building, with renewed focus on AI, cloud, and cybersecurity certifications for delivery teams.
Conclusion: A Delicate Balancing Act
TCS’s 2025 salary hike rollout is emblematic of the delicate balancing act facing IT firms today—between cost control and employee engagement, AI disruption and delivery continuity, and short-term optimization and long-term resilience.
As the sector recalibrates, TCS’s strategic choices will be closely watched—not just by its 600,000+ employees, but by an entire industry navigating the next wave of transformation. For further insights into the evolving workplace paradigm, visit
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