TCS Announces Salary Hike for 80% Employees Amid Layoffs and Market Uncertainty

TCS surprised its employees by announcing pay increases for qualified associates up to grade C3A and comparable (freshers to mid-level), which covers about 80% of its workforce.

TCS Layoffs 2025: 12,000 Mid and Senior-Level Staff to Be Impacted

TCS plans to lay off 2% of its workforce this year, or around 12,000 mid- and senior-level personnel. This is at a time when many of its competitors have put compensation increases on hold or postponed them.

CHRO Milind Lakkad and CHRO-designate K Sudeep sent out an internal message on 6 August stating that the pay increase will take effect on September 1. In response to a question from the media, the corporation stated that it can affirm that, as of September 1, 2025, it will be raising wages for almost 80% of its employees.

June Quarter Results: Revenue Decline and Client Slowdown

In an unusual departure from its April cycle, TCS hinted during the April earnings conference call that it could have to postpone its yearly raises. This came as clients' pessimistic mood was heightened by a slowdown and uncertainties surrounding tariffs.

Even in the earnings for the June quarter, Lakkad stated that the corporation has not yet decided whether to raise wages. TCS's June quarter results showed poor performance, which was credited to the closing of the BSNL purchase, cautious customer mood, delayed decision-making, and unfavourable macroeconomic conditions.

Due to geopolitical uncertainty that slowed demand, its June quarter revenue decreased 3.1% year over year in constant currency and 3.3% sequentially. TCS gave its employees pay increases last year that ranged from 4.5% to 7%, with strong performers getting double-digit raises.

The average raise, however, has not been revealed by the corporation in its communications. The announcement of this year's pay rise coincides with a difficult time when clients are being careful with their spending and making decisions slowly in important markets like the US and Europe.

Future Outlook: TCS Optimistic Despite Market Challenges

TCS is nevertheless hopeful about a recovery and expects demand to pick up in the second part of the year. When discussing compensation increases, Indian IT CEOs have taken a cautious stance. Salil Parekh, the CEO of Infosys, stated that the company has completed its pay increases for the fourth and first quarters of the previous fiscal year when discussing the schedule for wage increases.

As it always does at the end of a cycle, Infosys is now starting to assess the timing for the next one. Two rises over 18 months resulted from the disruption of the normal cycle during COVID-19. Nothing is going to change. The company will continue using its current procedure and promptly disclose the upcoming cycle.