Tata Consultancy Services (TCS), India’s largest IT services firm, has officially confirmed that employee salary hikes remain on hold due to persistent global market volatility.
The announcement was made by Chief Human Resources Officer Milind Lakkad following the company’s Q1 FY26 earnings report, reinforcing a cautious approach to compensation amid economic headwinds.
Milind stated, “We haven’t been able to take a decision yet on the wage hike cycle,” adding that the company will reassess the situation later in the fiscal year depending on business performance.
Global Headwinds Impacting IT Sector
The decision to defer salary increments—typically rolled out in April—comes as TCS grapples with sluggish demand, particularly in North America, and delays in discretionary IT spending.
CEO K Krithivasan attributed the subdued growth to geopolitical tensions, economic uncertainty, and supply chain disruptions, which have led clients to postpone project ramp-ups.
Despite posting a 6% YoY rise in net profit to ₹12,760 crore in Q1 FY26, revenue growth remained modest at 1.3% YoY, with a 1.6% sequential decline from Q4 FY25.
These figures reflect the broader challenges facing the IT industry, prompting TCS to adopt a fiscally conservative stance.
No Timeline Yet for Salary Revisions at TCS
While salary hikes have not been ruled out entirely, Milind emphasized that no fixed timeline has been set.
“Because of the uncertain environment, we will decide on wage hikes during the year. It can be at any time depending on business,” he said.
The move mirrors TCS’s approach during the pandemic years, when compensation adjustments were similarly deferred.
Analysts suggest this reflects a broader trend of cost containment across the IT sector.
TCS Hiring Plans Remain Intact
In contrast to the compensation freeze, TCS continues to invest in talent acquisition. The company added 6,071 employees in Q1 FY26, bringing its total headcount to 613,069.
It also reaffirmed its commitment to onboarding 42,000 campus hires in FY26, matching last year’s intake.
Milind clarified that hiring is planned on a yearly basis, not tied to quarterly performance.
“We had increased hiring in earlier quarters, but later encountered some business challenges. This created an imbalance, though it’s not a major concern,” he explained.
Market Reaction and Employee Sentiment
TCS’s market valuation reportedly dropped by ₹24,295 crore over four trading days following the announcement.
This decline reflects investor concerns about the company’s growth prospects and workforce morale.
While quarterly variable payouts continue, the indefinite nature of the salary hike decision has left employees uncertain.
Still, internal indicators suggest retention is improving, with quarterly annualized attrition rates declining even as the trailing twelve-month figure rose slightly to 13.8%.
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