Tata Consultancy Services (TCS), India’s largest IT services company, has confirmed it will roll out salary hikes for nearly 80% of its employees starting 1 September 2025, even as it proceeds with a planned layoff of approximately 12,000 staff this year.
The announcement was made internally via email by Chief Human Resources Officer Milind Lakkad and CHRO Designate K Sudeep, and was first reported by Press Trust of India (PTI) on Wednesday. According to the email, all “eligible associates in grades up to C3A and equivalent” will receive revised compensation. The communication also thanked employees for their “dedication and hard work.”
A TCS spokesperson later confirmed the announcement to PTI, stating, “We will be issuing wage hikes to around 80% of our employees effective September 1, 2025.”
The salary revision comes at a time of major transition within TCS. In July 2025, the company announced plans to reduce headcount by 2%—roughly 12,000 employees globally—largely affecting mid and senior-level roles. The restructuring is part of what TCS has termed a shift toward becoming a “future-ready organisation,” with heavy investments underway in artificial intelligence, market expansion, and digital infrastructure.
In a statement released last month, the company said:
“As part of this journey, we will also be releasing associates from the organisation whose deployment may not be feasible.”
This simultaneous move to reward junior employees while trimming senior layers reflects a deliberate rebalancing of the talent pyramid—a strategy increasingly seen in the Indian IT sector, which is under pressure to cut costs and upskill for a tech-forward future.
Economic Headwinds and AI Disruption
The TCS pay hike and layoff decisions come amid growing signs of turbulence in the global IT industry. According to quarterly reports, India’s top IT firms, including TCS, Infosys, and HCLTech, reported muted single-digit revenue growth in Q1 FY26. Client hesitation, delayed deal closures, and tightening global budgets have contributed to a more cautious outlook across the sector.
Further complicating the outlook is the accelerating adoption of artificial intelligence (AI), which is reshaping service delivery models and altering workforce needs. TCS, like its peers, is now caught between the need to future-proof operations and the imperative to retain morale among its massive workforce.
Speaking to CNBC-TV18 earlier this year, analysts had warned that a structural shift was underway in IT employment patterns, with AI-led automation forcing companies to rethink both talent mix and delivery models.
What This Means for Employees
As of now, the pay hikes will benefit employees up to the C3A grade, typically encompassing junior to early-mid career professionals. TCS has not publicly disclosed the average increment percentage, but past revisions have ranged between 5% to 8% for eligible employees, depending on performance and market benchmarks.
The company has not provided specific timelines or severance details for the upcoming layoffs, nor has it clarified whether reskilling or redeployment options are being considered for affected employees.
With over 600,000 employees globally, TCS is one of the world’s largest IT employers. How it navigates this phase of simultaneous reward and rationalisation will likely influence broader HR strategies across the Indian technology sector.