The internal announcement, made via email on 6 August and accessed by Mintstated: “We are pleased to announce a compensation revision for all eligible associates in grades up to C3A and equivalent, covering 80% of our workforce,” wrote Milind Lakkad and K Sudeep, chief human resources officer (CHRO) and CHRO (designate).
The hike applies to employees with about 11 years of experience or less, in the C3A band. Those in higher bands such as C3B, C4, or C5 have not yet been included in this round of raises. Last year’s hike, effective April, was between 7-9%, but this year’s raise percentage remains undisclosed.
This salary hike is significant because it comes after months of uncertainty and anxiety for employees—marked by delayed raises, reduced bench time, and large-scale layoffs. With attrition rising and morale shaken, the move offers some relief and signals a shift in TCS’s employee strategy.
Relief after turbulence
The announcement comes as a welcome move after three turbulent months for employees.
First, TCS delayed wage hikes citing macroeconomic uncertainty. Then, it slashed the “bench time” allowance (how long employees can go without a project) to 35 days. Third, on 27 July, it announced it would cut 2% of its workforce—roughly 12,200 employees—mainly targeting middle and senior management.
“The company wants to fire-fight now that it announced hikes and reduced bench time. Mr Lakkad is giving us a parting gift before he leaves as CHRO,” said an employee on condition of anonymity.
Another executive added, “These hikes were much awaited,” highlighting how management had not given any prior indications of a revision.
TCS is the first among India’s top five IT firms to announce pay hikes this year. Infosys, Wipro, and Tech Mahindra have yet to decide, while HCL Technologies had hinted at hikes in October but offered no clarity.
TCS traditionally announces hikes from April every year but the management maintained a stoic silence on the quantum and timing of the wage hikes for this year. The hikes also comes after attrition at TCS jumped to a two-year high of 13.8% in the April-June 2025 period.
The layoffs sparked widespread anxiety across the company. It wasn’t just senior leaders—employees at all levels began to worry about their futures. Executives without current project assignments grew restless, and even veterans with 15+ years of experience quietly started looking for new roles.
Uncertain outlook
TCS reported a third straight quarter of declining revenue, closing the June quarter at $7.42 billion—down 0.59% sequentially, making it the worst performer among the top five Indian IT firms.
The company’s operating margins, which rose 30 basis points last quarter to 24.5%, are expected to bear the heat of the wage hikes in the coming quarters. For now, TCS’s operating margins of 24.5% are the highest in the industry.
The company has underperformed peers HCLTech and Infosys since the last two years and its current outlook does not look promising as it has been losing clients to smaller, more agile tech service providers.
According to Mint’s report on 5 August, the IT services company even hired Pontoon Solutions, a US-based managed services firm to deal with its third-party staffing vendors. As against the past where TCS would engage directly with its staffing vendors, Pontoon Solutions will now serve as the bridge between TCS and its more than two-dozen vendors, ensuring that the IT outsourcer does not have direct contact with its employees involved in hiring and placing candidates from staffing firms on contract.
Industry headwinds
The broader IT sector is battling a slowdown in client spending, worsened by geopolitical tensions, a tariff war initiated by US President Trump, and the growing impact of generative AI on tech jobs and revenues.
TCS has also struggled to bag deals valued more than $1 billion, which are critical in filling the company’s coffers as they guarantee a certain amount of business every year. In comparison, Cognizant Technology Solutions Corp, reported three mega deals in the first six months of 2025.
While TCS did add 5,090 employees last quarter, bringing its headcount to 613,069, its larger goal of hiring 40,000 freshers this year still stands.
