TCS Salary Hike vs Inflation: Growth or Just an Illusion?

Tata Consultancy Services (TCS), India’s largest IT services employer, has finally announced its annual salary hike, five months later than usual. Traditionally, increments are rolled out in April, but this year, employees had to wait until September 1, 2025, to see their revised pay. For most of TCS’s 600,000-strong workforce, the hike ranges between 4.5% and 7% as per reports, while India’s retail inflation is currently pegged at 4.6%.

At first glance, this sounds like good news. But a closer look raises a key question: are salary hikes really keeping pace with inflation, or is this just an illusion of growth?

The Math Doesn’t Add Up

• TCS’s median employee salary stands at ₹8.04 lakh per annum (FY25). Applying the announced hike, a median-level employee could see their pay rise by just ₹36,000–₹56,000 annually. 
• With inflation running at 4.6%, this raise barely keeps up with the rising cost of everyday expenses like groceries, rent, and bills, leaving employees little to actually save or spend more.

Hikes Are Among the Lowest in Four Years

• TCS’s hikes this year are also among the lowest in recent times, highlighting the slowdown in the IT services business. 
• Year-on-year, increments have steadily declined, from 10.5% in FY22 to 6–9% in FY23, 7–9% in FY24, and now just 4.5–7% in FY25.

Strong Margins, Weak Hikes

• TCS has maintained industry-leading operating margins, ranging between 24.1% and 24.6% over the past three years. 
• Yet, during the same period, salary hikes have steadily declined, from double-digits in FY22 to just 4.5–7% in FY25. This shows that while the company’s profits remain strong, employees aren’t seeing a proportional share in the growth.

The Reality for TCS Employees

When compared across the industry, TCS clearly lags behind its peers on compensation.

Median Employee Salary in FY25 :

Despite being the country’s largest IT employer and a consistent profit generator, TCS employees earn 20–40% less than their peers at Infosys and HCL Tech.

Layoffs in the Backdrop

• Adding to the uncertainty, TCS announced its biggest-ever downsizing in July 2025, laying off 12,000 mid- and senior-level employees, around 2% of its global workforce. 
• Officially framed as a response to “skill mismatches,” it is believed to be part of a larger push towards AI-driven efficiency and learner operations.

The Bigger Picture

• Raises Barely Keep Up with Inflation: While the hike may look good on paper, after adjusting for inflation, junior to mid-level staff (freshers to grade C3A) receive raises that barely cover rising costs, leaving little real improvement in pay.
• Declining Hikes Despite Strong Growth: Over the past four years, TCS has delivered strong revenue and profit growth. Revenue peaked at 17.6% in FY23 and profits reached 14.8% in FY22, but employee salary hikes have lagged, leaving many feeling under-rewarded.
• Delayed Increments Add Financial Pressure: Raises that were due in April were delayed until September, cutting short the financial benefit for FY25. For employees juggling EMIs, rent, and everyday expenses, this long wait has meant months of tighter budgets and added stress.
• Margins Maintained by Holding Down Wages: With employee costs forming the bulk of IT expenses, TCS has been able to maintain strong operating margins partly by keeping salary hikes low.
• Big Brand, Lower Pay: Despite being one of the largest and most well-known IT companies, TCS keeps salaries lower than peers, using its brand and job security to protect margins while leaving employees underpaid.

Conclusion

TCS’s latest salary hike highlights the growing gap between corporate growth and employee well-being. For a company of over 600,000 employees, the message is clear: in the push for automation and efficiency, employee pay is no longer a top priority.

The reality is that for most employees, the so-called “hike” barely keeps them afloat against inflation; growth, in this case, may just be an illusion.

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