IT Sector Faces Dry Promotions, Slow Hiring, Low Raises in FY26

As India’s IT sector prepares to navigate FY26, signs point to a more cautious and conservative approach to talent management.

Industry experts and HR leaders across Tier-I and mid-sized IT firms suggest that dry promotions, moderate salary hikes, and measured hiring strategies will define the landscape in the financial year 2025-26.

Dry Promotions: Recognition Without Reward?

A growing trend in recent years has been the rise of “dry promotions“ — title elevations without corresponding salary increments.

While these promotions are often positioned as recognition of performance and readiness for expanded responsibilities, they also serve as a cost-control mechanism for companies grappling with margin pressures, global macroeconomic uncertainty, and slower deal cycles.

In a notable example, Tata Consultancy Services (TCS) — India’s largest IT services firm — has announced promotions for 1.1 lakh employees in FY25, but without the usual pay hikes.

This shift in approach reflects the volatile business environment and the company’s strategic decision to defer salary increments for the year.

While promotions may boost employee morale in the short term, the absence of financial reward raises concerns about long-term engagement.

HR analysts say that employees are beginning to feel the pinch, with morale and engagement potentially at risk if compensation does not eventually follow the change in designation.

“Promotions are welcome, but they must be meaningful. A title change without financial reward can dilute the overall value proposition,” notes an industry HR head on condition of anonymity.

Salary Hikes: Moderate and Performance-Driven

Salary hikes across the IT sector are expected to be modest, with average increments projected between 5-8%, depending on company performance and individual contribution.

Top performers and niche skill holders might see slightly higher adjustments, but the era of double-digit hikes for the majority appears to be over — at least for now.

TCS’s move to postpone pay hikes even as it rolls out large-scale promotions is being closely watched by peers. This signals a broader shift in how recognition is being decoupled from immediate financial incentives, especially in firms navigating global uncertainties and contract renegotiations.

In the words of a senior HR executive at a leading IT services firm: “The cost-to-serve ratio is under pressure, and with global clients seeking more value for money, we must be prudent in our talent cost structures.”

Hiring: Cautious Optimism and Targeted Growth

The data shows that headcount at India’s top IT companies has declined over the past year, with the exception of TCS, which added only 6,433 employees in FY25.

Based on these trends in the IT sector, hiring in FY26 is expected to grow, but at a slower and more deliberate pace.

Companies are moving away from the large-scale onboarding drives of the post-pandemic boom years and focusing instead on lateral hiring, upskilling, and role-specific recruitment in high-demand areas like AI, cybersecurity, and cloud engineering.

Campus placements may continue at a reduced scale. However, TCS plans to hire 40,000 freshers, Infosys around 20,000, Wipro between 10,000 and 12,000, and HCLTech approximately 10,000 in FY26.

Some firms are opting to honor existing offers but delay joining dates, while others will focus more heavily on internal mobility and contractual/gig-based roles.

What This Means for Employees

• Upskilling will be critical: Employees are being urged to stay relevant by building future-ready skills in emerging technologies.
• Patience and perspective: While the slowdown in financial rewards might be disheartening, career growth may still come through increased responsibilities and diversified roles.
• Job mobility: Those with hot skills may continue to switch roles for better pay, but the overall job market will be more competitive and less lucrative than in previous years.

Conclusion

FY26 is shaping up to be a year of pragmatism over exuberance in the Indian IT sector. With an eye on sustainability and long-term growth, companies are tightening talent strategies while balancing recognition and retention. For professionals, this may be a year to stay the course, invest in self-growth, and prepare for the next cycle of expansion when it arrives.

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