TCS puts Hikes for 6.07 Lakh Employees on Hold due to Business Uncertainty, US tariffs

Tata Consultancy Services (TCS), India’s largest IT services provider by revenue, has decided to delay its annual salary hikes for employees that were initially scheduled for April. The decision comes amid mounting global economic uncertainty, exacerbated by the ongoing trade tensions and tariff disputes between the United States and other nations. The company announced during a recent press briefing, where executives emphasized the need for caution in response to unpredictable market conditions.

Salary Increments Postponed Amid Global Headwinds

According to TCS, the company will assess the situation and introduce the salary hikes later in the financial year once there is more stability in the macroeconomic environment. This strategy echoes a similar move made during the COVID-19 pandemic five years ago, when the company had postponed pay raises amid a global business slowdown.

An official from TCS stated, “We will decide during the year when to make the wage hike,” reinforcing the company’s commitment to flexibility during uncertain times. The decision is reflective of a broader trend in the IT sector, where companies like Infosys and Wipro are also expected to make cautious compensation decisions in their upcoming earnings reports.

Variable Pay Continues Based on Performance

While fixed salary increments are on hold, TCS will proceed with its quarterly variable pay program. For the fourth quarter of FY25, 70% of employees are expected to receive their full variable payout. The remaining employees will have their variable pay determined by specific business unit performance and other internal benchmarks.

Discretionary Spending and Client Sentiment

TCS has also noted a slowdown in discretionary spending among clients, particularly in terms of project ramp-ups and investment decisions. This trend is being driven by uncertainties around global tariffs and broader economic conditions. CEO and Managing Director K Krithivasan acknowledged the situation, stating that if the instability continues, such delays in client spending are likely to persist.

Hiring Plans Stay Steady Despite Market Caution

Despite the deferment of salary hikes, TCS remains committed to expanding its workforce. The company plans to hire approximately 42,000 engineering graduates from campuses during FY26, aligning closely with its hiring figures from the previous financial year.

In Q4 FY25, which ended on March 31, the company added 625 employees. For the full fiscal year, TCS achieved a net headcount increase of 6,433 employees, successfully reversing the previous year’s reduction of over 13,000 roles. However, attrition slightly rose to 13.3% in the last quarter, up from 13% in Q3, bringing the total employee count to 607,979.

Strengthening the Leadership Bench

TCS has also announced two key leadership appointments aimed at reinforcing its executive team and driving its strategic vision. Aarthi Subramanian, previously Chief Digital Officer at Tata Sons, has been appointed as the new Chief Operating Officer (COO), Executive Director, and President of TCS for a five-year term beginning May 1. Subramanian has been instrumental in leading digital and innovation initiatives across the Tata Group and is expected to bring valuable insights to TCS’s digital transformation efforts.

Joining her in a leadership role is Mangesh Sathe, who has been named Chief Strategy Officer. Sathe, formerly the CEO of Tata Strategic Management Group, will be responsible for spearheading global consulting operations and overseeing mergers and acquisitions. Both leaders will report directly to CEO K Krithivasan.

“These appointments are part of a broader strategic initiative,” Krithivasan said. “As the tech landscape evolves rapidly, we need to build capabilities not just internally but also through partnerships and talent expansion. We’re focused on scaling up our leadership capacity to stay ahead.”

TCS reported strong momentum in its deal pipeline despite economic concerns. It recorded a total contract value (TCV) of $12.2 billion in the fourth quarter of FY25, showing a strong rise from $10.2 billion in the previous quarter. In the first and second quarters, TCVs stood at $8.3 billion and $8.6 billion, respectively.