TCS rolls out pay hikes of up to 7% for majority of employees

Tata Consultancy Services (TCS) has rolled out salary increases of 4.5% to 7% for most employees, with top performers receiving over 10%, PTI reported on Tuesday, citing people familiar with the development.

The country’s largest IT services exporter began sending increment letters late on Monday, and the hikes will take effect from September, according to the report.

The hikes, largely covering junior- and mid-level staff, follow a series of human resources announcements at the Tata group firm in recent months.

In July, TCS said it would defer salary revisions amid uncertain demand, and later announced plans to cut around 2% of its workforce, or roughly 12,000 employees, mainly at mid- and senior levels.

Despite the layoffs, the company hired 5,000 employees in the April–June quarter, taking its total headcount to 613,069 as of June 30.

Analysts at Jefferies described the layoffs as a “canary in the coal mine,” warning of possible execution slippages and longer-term attrition amid weak demand and an AI-driven push for productivity.

In an interview with Moneycontrol, TCS CEO and Managing Director K Krithivasan said the decision reflects a shift in operating models, particularly due to the growing use of AI, changes in client expectations, and the move toward product-aligned, agile delivery structures.

“Clients are moving more towards product-aligned models... the way we work is changing,” Krithivasan said. “This also means that, as an organisation, we have to be futuristic, we have to be agile, we have to be future ready. We have to have the right skillsets to work in the future.”

Krithivasan insisted that the layoffs are not about AI-led productivity gains replacing jobs, but rather the inability to redeploy certain roles effectively in the company’s new structure.

“This is not because of AI giving some 20% productivity gains. We are not doing that,” he said. “This is driven by where there is a skill mismatch, or, where we think that we have not been able to deploy someone.”