After months of uncertainty, Tata Consultancy Services (TCS) has finally announced salary hikes for its employees, bringing some relief to its workforce. On Monday evening, increment letters were rolled out across the company, with an average hike of 4.5-7% for nearly 80% of staff.
Top performers, insiders said, received double-digit increases, though the bulk of the workforce will see increments within the 4.5-7% band.
The company did not reply to emailed queries till the time of going to the press.
The pay revision, while welcome, remains modest compared to earlier years. TCS had granted hikes in the same range last year, but in FY23 the band was higher at 6 to 9%, and in FY22 employees enjoyed an average increase of 10.5%. The steadily narrowing range underscores the pressure on the IT services industry, which continues to grapple with weak demand and slowing deal flow from global clients.
Restructuring pressures loom
The timing of the announcement itself reflects this softness. TCS typically rolls out increments in the first quarter of the fiscal, effective April 1. This time, the hikes were delayed by several months and will only take effect from September 1. At the company’s first-quarter earnings briefing in July, chief human resources officer Milind Lakkad had indicated that the decision on wage hikes would be taken later, depending on business visibility.
The announcement comes as the company is in the midst of a significant restructuring exercise. TCS has said it wants to make the organisation “future-ready” by investing in new technologies, expanding into new markets, and deploying artificial intelligence at scale. In July, the company had outlined its roadmap, which includes strengthening partnerships, building next-generation infrastructure and realigning its workforce model. A key part of this plan involves reskilling and redeploying employees, but also releasing staff whose roles cannot be realigned. TCS had indicated that around 2% of its global workforce, largely in mid and senior roles, would be impacted over the course of the year. Based on current headcount, this could translate into nearly 12,000 jobs.
Industry peers yet to act
While junior and mid-level employees have benefited from the increments, the backdrop of restructuring and workforce rationalisation has tempered the mood inside the company.
Among its peers, TCS is one of the first to move on compensation this year. Cognizant’s India unit announced increments in August, though those will take effect only from November 1. The other major IT players — Infosys, Wipro and HCLTech — are yet to announce their hikes for FY25. HCLTech has also hinted at workforce rationalisation, though it said the impact would largely be felt outside India. Wipro and Infosys are expected to come out with their decisions later in the second half of this fiscal.