Tata Consultancy Services (TCS), India’s largest IT services firm, has announced a TCS wage hike for approximately 80% of its employees, primarily targeting mid to junior-level staff. The announcement was made on August 6, 2025, via an internal email sent by CHRO Milind Lakkad and CHRO Designate K. Sudeep. The hikes will take effect from September 1, 2025.
The TCS wage hike announcement comes during a period of significant transition for the company, which is also in the process of laying off around 12,000 employees this year. The dual move reflects TCS’s evolving strategy to balance cost optimization with talent retention in a challenging global environment.
Focus on Mid and Junior-Level Employees
In the internal communication, TCS confirmed that the compensation revision will apply to “all eligible associates in grades up to C3A and equivalent,” covering roughly 80% of its global workforce. However, the specific percentage increase in salaries was not disclosed.
A company spokesperson stated, “We can confirm that we will be issuing wage hikes to around 80% of our employees effective 1st September 2025.” The announcement is seen as a morale-boosting measure for younger employees even as TCS moves forward with its broader restructuring.
The initiative underscores the company’s focus on retaining skilled talent at the foundational levels, which are often critical to execution but more vulnerable to attrition.
Layoffs Targeting Middle and Senior Ranks
Simultaneously, TCS is undergoing a workforce realignment strategy that involves letting go of approximately 2% of its global headcount, around 12,000 employees, mainly in mid to senior-level roles. The layoffs were announced last month as part of TCS’s efforts to become a “future-ready organisation.”
“These changes are part of strategic initiatives across new technologies, market expansion, and internal deployment of AI,” the company said. “Where redeployment is not feasible, associates will be released.”
This dual-track approach—investing in early-career talent while trimming higher-cost positions—signals a shift in operational priorities as the company responds to changing client demands and advances in automation.
Industry Headwinds and Strategic Response
TCS’s restructuring and wage revisions come at a time when India’s IT sector is grappling with a slowdown in revenue growth and global uncertainty. For Q1 FY26, most top-tier IT firms reported single-digit growth, attributing the weak performance to geopolitical instability, delayed client decision-making, and muted tech spending (Business Standard).
TCS’s stock fell 3.5% earlier this week after its earnings missed analyst estimates, with investors reacting to concerns over the deferred salary hikes and looming layoffs. Meanwhile, company executives maintain that these decisions are essential for long-term competitiveness.
“TCS is on a journey to become a future-ready organisation,” the firm reiterated, emphasizing investments in next-generation infrastructure, scaled AI deployment, and deeper global partnerships as part of its strategic focus areas.
Balancing Retention and Readiness
While the TCS wage hike may provide short-term reassurance to a large portion of the workforce, the broader message from TCS suggests a long-term transformation in how IT firms are structured and operated.
With global tariff issues, AI-driven disruptions, and shifting client expectations, Indian IT majors like TCS are under pressure to adapt quickly. For now, rewarding junior talent while realigning senior roles may be a key part of that evolution.
The coming quarters will reveal how effectively TCS manages this transition and whether similar moves follow across the industry.
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