TCS Announces Wage Hikes for 80% of Workforce, Targeting Mid to Junior Levels

On August 6, 2025, Tata Consultancy Services (TCS), India’s largest IT services company, informed its employees of upcoming salary hikes. These will cover around 80% of its workforce, particularly those in mid- and junior-level positions.

The salary increases, effective from September 1, were communicated via an internal email by Chief Human Resources Officer Milind Lakkad and CHRO Designate K Sudeep.

The email read, “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 hike amount has not yet been disclosed.

Parallel Plans for Workforce Reduction

While the company has chosen to reward a large segment of its employees, it is also undergoing a significant workforce restructuring.

TCS is preparing to lay off around 12,000 employees, which accounts for roughly 2% of its global workforce. This layoff primarily targets employees at mid- and senior levels.

The company explained this move as part of its journey to become a “future-ready organisation.”

This includes key initiatives in technology investments, artificial intelligence deployment, expansion into new markets, enhancement of infrastructure, and workforce model realignment.

TCS’s Broader Strategy: Future-Readiness

TCS had previously stated, “TCS is on a journey to become a future-ready organisation. This includes strategic initiatives on multiple fronts, including investing in new-tech areas, entering new markets, deploying AI at scale for our clients and ourselves, deepening our partnerships, creating next-gen infrastructure, and realigning our workforce model.”

As part of this transition, the company has already begun reskilling and redeployment initiatives. “We will also be releasing associates from the organisation whose deployment may not be feasible,” TCS added.

Grading Structure and Scope of Hike

TCS’s grading system starts at Y (trainee), followed by C1 and C2, leading up to C3A, which marks the beginning of mid-level roles.

Employees at the C3A level are usually titled Assistant Consultants. These roles come after entry-level designations such as IT Analyst (C2).

The wage revision will apply to all employees in roles up to and including C3A. According to the email, the company thanked its employees for their dedication and hard work as TCS works toward shaping its future.

Market Impact and Financial Performance

TCS shares have seen a sharp drop, falling 34% from a 52-week high of ₹4,585 to ₹3,030.75 as of August 7, 2025.

This decline comes amid broader turbulence in the IT sector, which is facing pressure from global macroeconomic instability and geopolitical uncertainties.

TCS, along with other top Indian IT companies, reported single-digit revenue growth in Q1 FY26. The company pointed to economic uncertainty, global conflicts, and delays in client decision-making as reasons for the subdued performance.

Industry-Wide Concerns and AI Disruption

The layoffs at TCS have triggered a wider debate about whether the Indian IT industry is entering a major transformation.

There are concerns over how global trade tensions, US tariffs on outsourcing, and artificial intelligence disruptions are reshaping industry dynamics.

TCS had earlier acknowledged these pressures. During a post-Q1 earnings press briefing, CHRO Milind Lakkad had mentioned that no decision on salary hikes had been taken at the time due to ongoing economic and geopolitical uncertainty.

K Krithivasan, TCS CEO and MD, noted, “During our last press meet (in April 2025), we had spoken about delays in decision making in projects with respect to discretionary investments. This trend has continued and intensified to some extent in this quarter, and global businesses were disrupted due to conflicts, economic uncertainty and supply chain issues.”

A Delicate Balancing Act

TCS’s dual announcement of wage hikes and layoffs reflects a complex balancing act.

On one hand, the company is investing in employee morale and talent retention, and on the other, it is streamlining operations to adapt to a changing tech landscape.

With a workforce of 6,13,069 as of June 30, 2025, TCS’s restructuring efforts and emphasis on AI, new technology, and upskilling indicate a strategic shift aimed at long-term sustainability and competitiveness in the global IT market.