Tata Consultancy Services (TCS) Declares FY25 Annual Salary Increases: Benefit to More than 6 Lakh Employees

Tata Consultancy Services (TCS), India’s largest IT services provider, is planning to announce annual salary increases for its staff for the financial year 2025-26. The new salary revisions, to be announced by the end of March 2025, are likely to be between 4% and 8%, according to The Economic Times. The pay increases will be effective from April 2025, providing some relief to the company’s huge employee base of more than 6 lakh people globally.

The pay raises at TCS are a reflection of the current challenges in the Indian IT sector, particularly in the post-pandemic era. In the pandemic period of COVID-19, most large IT companies in India, such as TCS and Infosys, had given double-digit pay rises to their staff as the industry was witnessing a boom with greater demand for digital products. But the economic scenario has altered since then, and companies now face global economic headwinds, high inflation, as well as declining discretionary spending by firms.

As compared to double-digit increases provided in the past years, the 4% to 8% raises for FY25 are a steep decline, reflecting the turmoil in the IT sector. The prevailing worldwide economic uncertainty has caused more frugal spending, which has reflected in the revenues of behemoths such as TCS and Infosys, rendering it challenging to maintain greater salary increments.

TCS Salary Hike Structure

TCS’s pay raises for FY25 are likely to be between 4% and 8%, with the median increase likely within this range. This is slightly lower than in FY24, when the median pay rise had been between 7% and 9%. To put things into perspective, the company had given an average raise of 10.5% in FY22, prior to the onset of the economic disruption caused by the pandemic.

Reports indicate that the pay increases at TCS are also tied to employees’ adherence to the company’s return-to-office (RTO) policy, which was rolled out in early 2024. Employees who stick to the company’s work-from-office policy might be eligible for greater compensation, while those seeking more flexible work options might receive lesser payouts.

The firm has not yet made the official announcement of the details of the salary increase percentages, and the final pay letters are to be released in March 2025. Nevertheless, the low-to-mid single-digit increases are regarded as a reflection of the industry-wide trends in the IT services sector.

Industry-Wide Trend of Lower Hikes

TCS’s pay hikes are part of the larger trend visible in the overall Indian IT industry. Following a phase of healthy growth during the pandemic, the IT sector is now adapting to a slowdown in business. Such salary hikes of 5% to 8% for FY25 have been announced by similar companies like Infosys, the largest competitor of TCS.

The slowdown in salary increases indicates the woes of IT services companies, as global customers are being more prudent in their expenses and are also eyeing cost-reduction initiatives more than ever before. The softening of discretionary expenditure, along with increased competition and inflationary pressures, has put it at a challenge for these companies to provide the munificent increases that they have provided during the pandemic boom.

What This Means for TCS Employees

While employees are typically greeted with the news of salary increases, the modest increases can cause disappointment for many, given the high hopes of workers following past years’ big jumps. With the IT industry readjusting to new realities in the post-pandemic era, employees might have to adjust their expectations on compensation while also looking at the long-term stability and growth prospects that such companies as TCS provide.

TCS has been the flagbearer in the international IT services sector, with a great track record for offering secure jobs and career development opportunities. That said, the reduced salary hikes for FY25 can be a wake-up call for employees who got used to the higher payouts of the previous years.

TCS’s move to announce a 4% to 8% salary increase for the year 2025-26 is an indication of the greater struggle being experienced by the Indian IT industry in a post-Covid economy.

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