TCS set to roll out salary hikes for FY25, with variations based on performance, office attendance

Tata Consultancy Services (TCS), India's largest IT services provider, is set to implement its annual salary increases for FY25 in March, with disbursements expected to begin in April. It is reportedly said that the increments are expected to range between 4-8%.

TCS has also tied its salary increments and variable payouts to employee compliance with its return-to-office policy, which was introduced in early 2024. "We have been informed that the hikes will be in the range of 4-8%. The business verticals that have performed well tend to receive higher increments, but overall, the hikes have not been very substantial," a source from TCS told ET.

In comparison, TCS's increments in FY24 averaged between 7-9%, while employees received an average of 10.5% in FY22. This shift marks a notable decrease, reflecting broader trends in the IT sector.

The timing of these salary increases follows the recent quarterly release of variable pay for the October-December period. Senior-level employees, however, faced reduced payouts, with some seeing reductions between 20% to 40%. This is in line with the industry's trend of tapering compensation growth following the high-growth periods during the Covid-19 pandemic.

The second-largest player in India's IT sector, Infosys, has also announced plans to distribute annual compensation revision letters by the end of March. Like TCS, the increments at Infosys will be based on recommendations from various business units, with expected increases ranging from 5-8%.

TCS's grade hierarchy spans from Y (trainees) to CXOs, with senior employees typically falling within the C3B and above bands. As business conditions show signs of recovery, approximately 70% of TCS employees, particularly those in the C3 and below categories, received their full variable pay for the period.

An employee with over eight years at TCS commented, "The hikes have been minimal over the past three to five years. There has been a consistent decline since the exit of former CEO N Chandrasekaran."

Chandrasekaran, who now serves as the chairman of Tata Sons, led TCS from 2009 to 2017, a period of significant growth for the company. Rajesh Gopinathan succeeded him until May 2023, and was followed by the current CEO, K Krithivasan.