TCS and Infosys Set to Announce Salary Increases Amid IT Industry Changes
Tata Consultancy Services (TCS), India’s largest IT services company, is gearing up to implement annual salary increases for FY25 starting in March, with payouts anticipated to commence in April. Reports indicate that salary hikes will average between 4-8%, according to sources familiar with the situation.
In a similar vein, Infosys, which ranks second in the IT sector, has communicated to its employees that annual compensation revision letters will be distributed by the end of March. The company is currently formulating raises based on recommendations from its delivery units, with expected increments likely falling between 5-8%.
Reflecting the patterns in the $254 billion IT industry’s growth, salary hikes among leading firms have seen a reduction, shifting from double-digit increases during the pandemic’s peak growth period to single-digit adjustments in recent years.
Additionally, TCS has tied its salary increases and variable payouts to employee compliance with its return-to-office (RTO) policies introduced at the start of 2024. An employee noted, “We have been conveyed the hikes will be around 4-8%. The business verticals which have performed well usually see greater increases, but overall increments have not been very encouraging.” TCS has yet to respond to inquiries regarding this matter. For context, the average salary hike in FY24 was reported at 7-9%, while it stood at 10.5% in FY22.
The forthcoming salary increases from TCS will be in conjunction with the quarterly variable pay (QVP) distributed in February for the October-December reporting period. Senior-level employees continue to receive lower variable pay, ranging between 20% to 40%. The grade structure at TCS begins with Y (trainees) and progresses up to C1 (systems engineers), C2, C3-A&B, C4, C5, and finally CXOs. Employees classified as C3B and above are likely to belong to the senior category. Despite a gradual recovery in business for TCS and other software service firms, approximately 70% of the workforce received their full variable pay, which predominantly includes those ranked C3 and below.
One long-time employee at TCS remarked, “The hikes have been meager each year for at least the past three to five years. It has been on the decline since the exit of former chief executive N Chandrasekaran.” Chandrasekaran, who now serves as chairman of Tata Sons, led TCS from 2009 to 2017 during pivotal growth stages for the outsourcing industry. His successor, Rajesh Gopinathan, held the position until May 2023, with K Krithivasan taking over thereafter. In an interview with the Economic Times in January, Krithivasan acknowledged the ongoing market uncertainty but expressed optimism for a turnaround backed by robust deal wins, reporting a total contract value (TCV) of $10.2 billion, one of the strongest performances for a third quarter.
In terms of workforce development, TCS announced promotions for over 25,000 employees, contributing to a total promotion rate close to 20% this fiscal year, equating to more than 110,000 employees in a workforce exceeding 700,000. Milind Lakkad, TCS’s chief human resource officer, stated that the company is on pace to meet its target of hiring 40,000 fresh graduates by the end of March, with plans for an even higher target for FY26.