TCS Salary Hikes on Hold
in India

Pay Increase Postponed Due to Financial Hardships

India’s largest IT outsourcing firm, Tata Consultancy Services (TCS), has indicated a delay in its roll-out of year-on-year salary increases for 2025. The initiative, indicated by the company at its post-results press conference on Tuesday, comes in the aftermath of the firm facing tough macroeconomic conditions alongside a negative world business environment amid the escalating tariff tensions between the US and a number of its trade partners.
TCS CHRO Milind Lakkad confirmed the news, saying, “We will decide in the year when to give the wage hike.” This is a conservative, wait-and-watch strategy by the IT major, which is fighting a tougher operating environment. Amid growing concerns about global inflation and market volatility, many Indian IT firms are adopting similar caution.

When Will the Hike Take Place?

While the hikes were initially scheduled to be implemented in April as per the financial year cycle, the TCS management has now decided to postpone the timeline. The implementation will be undertaken later in FY26, only after there is more stability and clarity in the overall macroeconomic environment.
In spite of such deferments, the compensation focus remains at the forefront, the company asserted. TCS should still be providing variable compensation to the employees, thereby easing the blow for the employees. Employees with high performance metrics or those in critical functions may still see steady rewards in the near term.

Quarterly Variable Pay Still Active

Lakkad said that 70% of the company’s staff will receive their full-eligible fourth-quarter variable pay. The remaining 30% will receive pay based on business unit performance. The framework allows the company to pay the top performers while it is being conservative during good times.

Attrition Rises But in Check

As of Q4FY25, the firm attrition rate for talent was 13.3% over the previous 12 months.
Even a notch higher than before, Lakkad was optimistic: “Attrition has increased a wee bit to 13.3% this quarter. We are fine because our quarterly annualized attrition has reduced this quarter by 130 basis points. So, we should be fine.”
He explained that although attrition is a number to monitor, it has progressively improved, indicating a broadly consistent body of employees within an available talent pool. He also promised that attempts at employee engagement have been scaled up to accommodate retention.

FY26 Hiring Opportunities: Improved or Better

In the recruitment plans, TCS does not anticipate any slowdown to occur. Lakkad said the recruitment numbers for FY26 for the company would be comparable to or even higher than those of FY25. That is in line with TCS’s longer-term plan of having a strong bench of talent to be deployed whenever the demand picks up.

A little increase in headcount is recorded.
TCS’s workforce has grown to a total of 607,979 employees, following the recruitment of 6,433 new team members during the final quarter of FY25. Compared to the 601,546 employees it had on hand as of Q3FY25, that is a slight increase. A phased approach to recruitment suggests that the company is looking to the future without sacrificing its operational discipline.

Q4FY25 Performance: Revenue Growth, Small Profit Loss

In Q4FY25, TCS reported a net profit of ₹12,224 crore, 1.69% lower than the year before.
Nonetheless, operating revenue rose to ₹64,479 crore, a 5.29% increase over the previous quarter’s ₹61,237 crore.
The marginal fall in profit is indicative of industry-wide cost pressures and slowing ramp-ups of deals, while revenue growth was stable. The company is, however, financially strong, with strong cash flows and good customer relationships. Management remains hopeful about medium-term deal conversions and better utilization levels ahead.

Industry-Wide Implications

TCS’s move to postpone salary increases is being seen as a trendsetter for the overall IT services industry, where organizations are facing delayed client expenditure, geopolitical policy risks, and inflation. Other players in the industry will follow if the external situation does not change in the near future.

Last Takeaway: Strategic Pause, Not a Freeze

Although the employees may be frustrated by the delay in salary increases, it is TCS’s conservative strategy to ride out short-term fluctuations without jeopardizing long-term ones. With variable pay already in place, headcount increasing, and hiring plans intact, the company is definitely trying to balance people and profits.

The image added is for representation purposes only