India’s largest IT services firm, Tata Consultancy Services (TCS), is poised to implement annual salary increases for the fiscal year 2025 (FY25) in March, with disbursements commencing in April.
Sources indicate that the average salary hike is anticipated to range from 4% to 8%. In comparison, the average increase was 7% to 9% in FY24 and 10.5% in FY22.
N Chandrasekaran, the company’s former CEO who led from 2009 to 2017, presided over significant growth periods for the outsourcing industry. Following him, Rajesh Gopinathan served until the end of May 2023, and K Krithivasan has taken the reins since then.
Details on TCS Salary Hike: Variable Pay and Performance Metrics
The average salary increase for FY24 was recorded at 7% to 9%, while FY22 saw an average of 10.5%.
The recent downturn in the IT sector has contributed to a gradual reduction in annual salary increments. During the COVID-19 pandemic, increments were in double digits; however, they have since diminished to single-digit figures over the last couple of years.
The forthcoming salary hikes will be contingent upon employees’ adherence to TCS’s recently announced return-to-office (RTO) policy, which was introduced in early 2024.
These salary adjustments follow the quarterly variable pay (QVP) that was distributed in February for the October-December timeframe.
Senior-level employees are experiencing lower payouts, which range from 20% to 40%. Approximately 70% of TCS employees received the full amount of their variable pay, predominantly those in the C3 band and below.
Employee Sentiments, Business Segments, and Performance Outcomes
Reactions among employees regarding the salary hikes have been mixed. While some individuals welcome the increase, others perceive the adjustments as insufficient compared to previous years.
An employee remarked, “The annual salary increases have been minimal over the past three to five years. There has been a noticeable decline since the departure of former CEO N Chandrasekaran.”
While the business units that have excelled generally receive more substantial raises, the overall increments have not been satisfactory.
The grading system at TCS begins with Y, designated for trainees, and advances to C1 for systems engineers. The progression continues through C2, C3 – A&B, C4, C5, and culminates at the CXO level.
Employees classified in the C3B band and above are likely to be considered senior personnel.
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