Key Highlights :
TCS declares delayed pay rises of 4.5%–7% for around 80% of employees with effect from September 1, 2025.
Senior performers to get 10%+ increases, while senior employees are left out in the face of 12,000+ redundancies and restructuring.
Key Background :
TCS normally adjusts employees’ salaries annually in April. In 2025, though, the process got delayed because of worldwide economic downturn, unclear client expenditure behaviors, and softened IT demand. This raised doubt amongst employees since the company’s yearly appraisal process is highly monitored across the sector.
By August, TCS management conveyed the much-awaited decision to its employees. The increases were finally approved for up to grade C3A employees, representing almost four-fifths of the employee base. The increases of between 4.5% and 7% are effective September 1, 2025, a rare deviation from the company’s traditional annual compensation cycle.
The increase, while welcome, is much lower compared to earlier years. To put this into perspective, TCS had approved 10.5% hikes in FY22 when there was pent-up demand for IT post-pandemic, 6–9% in FY23, and around 7% in FY24. The 2025 numbers are thus the lowest in four years. However, the company has given high performers double-digit increases of 10% or higher, indicating that meritocracy still forms part of compensation policy.
In contrast to previous incremental cycles, these increases will not be retrospective, so employees will not receive arrears for the period April to August. This pragmatic move from a financial perspective might disappoint staff who were looking forward to backdated changes.
The move is made at the time when TCS is also curtailing cost. The firm has already terminated more than 12,000 staff members at the mid- and senior-management levels on grounds that it needs to rationalise its manpower and bring resources in line with business goals. Topmost employees in C3B and higher grades have been left out of the present hike cycle.
TCS has also implemented stringent measures like limiting bench time to 35 days a year and halting lateral hiring at senior levels. These initiatives reflect the company’s approach to becoming leaner and leaner in the face of tough global market conditions. Attrition, which remains an issue for the IT industry, adds another level of complexity to the management of workforce.
In a way, the 2025 pay raises mirror TCS’s balancing act: giving modest raises to most employees to keep them motivated, giving higher raises to top performers, and at the same time aggressively working on structural reforms to be sustainable in the long run in a competitive and changing IT services business.
About the Author
Abhishek Roy
Abhishek Roy is a Managing Editor at Business Minds Media India.