Amidst 12,000 job cuts, TCS announces salary hikes

India’s biggest IT services company, Tata Consultancy Services (TCS), has announced a salary increase for nearly 80 per cent of its staff. The hike mainly applies to junior and mid-level employees.

The development comes after the company’s plan to cut around 12,000 jobs this year. Those affected will mostly be in the mid and senior-level roles, making up about 2 per cent of the workforce.

ALSO READ | Why is TCS letting go of 12,000 of its employees? Is AI the reason?

The salary increases will take effect from September 1, 2025. Employees were informed about the decision through an internal email sent on Wednesday, August 6, by Chief Human Resources Officer Milind Lakkad and CHRO Designate K Sudeep.

The remaining 20 per cent of the workforce, which includes most mid and senior-level staff, will not receive the pay increase.

In this explainer, we take a look at the recent wage hike revision and the layoffs announced by the tech firm.

Let’s take a look:

TCS announces salary hike: What we know

India’s largest IT services firm has announced a pay revision for about 80 per cent of its staff, mostly those in junior to mid-level roles.

In an internal email sent to employees on Wednesday, the company

said, “We are pleased to announce a compensation revision for all eligible associates in grades up to C3A and equivalent, covering 80 per cent of our workforce. This will be effective 1st September 2025.”

The email further read: "We would like to thank each one of you for your dedication and hard work, as we build the future of TCS together,” according to a PTI report.

The salary increases will take effect from September 1, 2025. Reuters/File Photo

This announcement comes at a time when the company is

preparing to let go of over 12,000 employees as part of its wider plan to become a “future-ready organisation”.

The firm said its strategy includes investing in technology, using AI, growing in key markets, and realigning its workforce.

TCS has not given detailed information about the current revision plan.

In the previous appraisal cycle, the company had offered an annual raise between 4.5 per cent and 7 per cent, with higher increases for top performers starting April 2024, Moneycontrolsaid in a

report.

Why TCS is laying off 12,000 employees

The company is reducing its workforce by around 2 per cent in the 2026 financial year, mostly affecting staff in middle and senior management roles.

According to a Reuters report, the Tata Group is reshaping its workforce as it expands into new markets, adopts new technology, and rolls out AI. As part of this shift, nearly 12,000 jobs will be cut.

“This transition is being planned with due care to ensure there is no impact on service delivery to our clients,” the company

said.

As of the quarter ending June, TCS had 6,13,000 employees. A 2 per cent cut will affect close to 12,200 workers.

The company is reducing its workforce by around 2 per cent in the 2026 financial year. Image: News18

“It’s a difficult call we have to take to build a stronger TCS,” CEO K Krithivasan told Moneycontrol. He said the company is trying to handle the process with care and concern for those affected.

He added, “We have been calling out new technologies, particularly AI and operating model changes.

The ways of working are changing. We need to be future-ready and agile. We have been deploying AI at scale and evaluating the skills we will be requiring for the future. We have invested a lot in our associates in terms of how we can provide them with career growth and deployment opportunities.”

He further said that despite these efforts, some roles could not be reassigned. “This will impact roughly 2 per cent of our global workforce, primarily at middle and senior levels. It has not been an easy decision and one of the toughest

decisions I have had to take as CEO.”

The company said it will support affected staff with notice period pay, an additional severance package, extended insurance cover, and outplacement services.

India’s top IT firms, including TCS, saw weak single-digit revenue growth in the first quarter of FY26. Global tech spending has slowed down due to economic uncertainty and rising geopolitical tensions, which have also delayed client decisions.

With inputs from agencies