TCS Yet to Finalise Salary Hikes for 2025 Amid Economic Uncertainty and Slow Growth
TCS delays 2025 salary hike decision amid sluggish global economy, rising attrition, and cautious business outlook despite steady profits.
India’s leading IT services firm, Tata Consultancy Services (TCS), has not yet made a decision on salary hikes for 2025, as it navigates a volatile global economic environment and flat revenue growth. Traditionally, the company rolls out pay hikes in the first quarter of the financial year, with updated compensation reflecting in employee payslips by the second quarter. However, this year, the process is on hold.
Speaking at a press briefing on July 10 following TCS’s Q1 results, Chief Human Resources Officer Milind Lakkad addressed the uncertainty, stating, “We have not made a decision on that front yet and we will decide during the year, and as soon as we know, we'll let you know.”
The company’s cautious approach stems from ongoing macroeconomic challenges, including a downturn in demand and sluggish revenue performance. Lakkad emphasized that any decision on salary increments would be directly tied to business outcomes in the coming months. “So, if the macro-economic environment improves and, as a result, if our business improves, we'll definitely give the best possible hikes we normally give,” he said.
This is not the first time TCS has deferred hikes this year. Back in April, Lakkad made a similar remark, attributing the delay to global uncertainties such as trade tensions. “Because of the uncertain environment, we will decide during the year on wage hikes. It can be at any time, depending on business,” he noted, while assuring that the hike would happen within the calendar year.
Despite the uncertainty on compensation, TCS posted a net profit of ₹12,760 crore for the quarter ending June 30, marking a 4 percent sequential rise. However, revenue dipped slightly by 1.6 percent to ₹63,437 crore. The company’s operating income also saw a minor decline, though margins remained steady at 24.5 percent. Following the results, TCS shares fell by nearly 2 percent in early trading. Over the last six months, the stock has seen a 22.63 percent drop.
While the company continues to hire—adding over 6,000 new employees this quarter and bringing the total headcount to around 6.13 lakh—it is also facing challenges with employee retention. The attrition rate for IT services stood at 13.8 percent, the highest in nearly two years. “I think definitely it is a little more than our comfort level. 11 percent to 13 percent is our comfort range; it is a little more than that, we continue to make efforts to bring it down,” Lakkad added.
Compounding the issue is the continued impact of variable pay cuts. According to reports from earlier this year, TCS has reduced variable payouts for the third consecutive quarter. While the company claims that 70 percent of employees received full pay, others were paid less based on team performance.
In addition, the recently implemented office attendance-linked pay policy remains in effect. Employees attending less than 60 percent of working days at the office receive no variable pay, while those clocking in above 85 percent qualify for the full amount. Many employees have reported receiving only 20 to 40 percent of their eligible variable pay under the policy.
As the IT sector navigates a period of uncertainty, all eyes remain on TCS’s upcoming business performance and its subsequent decision on employee compensation.
