TCS defers salary hikes amid global uncertainty, US tariff concerns

India’s largest information technology (IT) services firm by revenue, Tata Consultancy Services (TCS), said it was deferring salary hikes for employees starting April, citing the growing macroeconomic uncertainty intensified by the ongoing tariff war between the US and other countries.

The hikes will be implemented later in the financial year, once there is greater clarity and the outlook improves, company executives said at a press conference on Thursday.

“We will decide during the year when to make the wage hike,” said Milind Lakkad, chief human resources officer of TCS.

The move echoes a similar decision made during the onset of the pandemic five years ago, when global business had ground to a halt. It also reflects the caution sweeping the IT services sector as companies tighten budgets. Rivals such as Infosys and Wipro, which report their fourth-quarter (Q4) results next week, may take similar steps.

While salary hikes are on hold, TCS will continue with quarterly variable payouts. For Q4, 70 per cent of employees will receive 100 per cent of their variable pay, while for the rest, it will depend on business performance.

Discretionary spending remains constrained. Over the past month, the company has seen delays in project ramp-ups and spending as clients wait for clarity on tariffs.

“There will be delays in discretionary spending if this continues,” said Chief Executive Officer (CEO) and Managing Director K Krithivasan.

TCS plans to hire about 42,000 engineers from campuses in 2025-26 — roughly in line with the numbers it committed and onboarded in 2024-25 (FY25). During Q4, which ended March 31, the company added 625 employees. For the full year, headcount rose by 6,433, reversing last year’s decline of 13,249.

Attrition inched up to 13.3 per cent in Q4FY25, from 13 per cent in the previous quarter. TCS had 607,979 employees on its rolls as of March.


Two leadership appointments

TCS has named a new chief operating officer (COO), nearly a year after N G Subramaniam’s retirement. Aarthi Subramanian, formerly chief digital officer at Tata Sons, will take over as COO, executive director, and president of TCS for a five-year term beginning May 1.

At Tata Sons, Subramanian led the group’s digital, technology, and innovation initiatives across a diverse portfolio.

TCS also appointed Mangesh Sathe chief strategy officer. Sathe, previously CEO of Tata Strategic Management Group at Tata Sons, will lead the global consulting practice and oversee mergers and acquisitions. Both executives will report to Krithivasan.

“This is part of our broader strategic exercise,” Krithivasan said. “As we see major shifts in technology, there are several areas where we need to build talent and partnerships. In some of these, we can’t rely solely on homegrown talent. To expand and maintain leadership in these areas, we wanted to increase our bandwidth.”