TCS Salary Hikes Amidst Layoffs: A Strategic Move

In a surprising turn of events, Tata Consultancy Services (TCS), India's premier IT services firm, has announced salary increments for approximately 80% of its workforce, primarily targeting junior and mid-level employees. This decision comes alongside the revelation of plans to lay off around 12,000 employees within the year, sparking debates on the evolving dynamics of the IT sector.

Key Details: The salary adjustments are set to take effect from September 1, 2025, as confirmed by TCS's CHRO Milind Lakkad and CHRO Designate K Sudeep. The exact percentage of the hikes remains undisclosed, leaving many to speculate on the implications for the affected employees.

Understanding the Layoffs

TCS describes the layoffs as part of a broader strategy to become a "future-ready organisation." This includes significant investments in new technologies, artificial intelligence, market expansion, and workforce realignment. The company emphasizes reskilling and redeployment initiatives but acknowledges the inevitable release of about 2% of its global workforce, primarily from middle and senior grades.

Industry Implications

The announcements have ignited discussions on the potential shifts within the IT sector, influenced by global economic uncertainties, US tariff policies, and the rapid advancement of AI technologies. With modest revenue increases reported in Q1 FY26, the industry faces challenges from unstable economic conditions and delayed client decisions.