India’s largest IT company, Tata Consultancy Services (TCS), has reportedly instructed managers to identify nearly 5% of employees for its lowest performance category, Band D, just weeks after completing one of the biggest workforce reductions in its history.
According to an internal email reviewed by Mint and confirmed by company executives, TCS HR asked business unit leaders to “review critically and share the list of associates who can be considered for Band D, thereby meeting the agreed 5% distribution.”
The instruction, issued during the latest appraisal cycle, has intensified concerns among employees already unsettled by the recent layoff of nearly 12,200 staff members.
Executives familiar with the process said many of the TCS employees impacted during the retrenchment exercise had previously been categorised in the same low-performance bracket. While performance-based classifications are common across the IT industry, insiders said the introduction of a more formal quota-based approach marks a notable shift from previous appraisal cycles at TCS.
Sources indicated that around 3% of the workforce, estimated at nearly 17,500 employees, were eventually categorised as underperformers. At the same time, top-performing employees reportedly received salary hikes of around 6% as part of the annual compensation revision cycle.
The development comes amid broader structural changes within the Indian IT sector, where companies are increasingly prioritising automation, productivity and AI-led efficiency amid slower global technology spending.
In response to the reports, a TCS spokesperson said, “In line with the announcement made during our Q4 earnings, we have rolled out annual increments to eligible employees. Additionally, we have completed the restructuring of compensation for all our India-based employees to align with the new labour codes.
The revised salary structure that the employees have received are guided by three key principles that include, compliance with the new labour codes, standardisation of wage structures across our India workforce, and protection of employees’ take-home salary, while allowing flexibility for tax efficiency.
TCS has consistently maintained a track record of awarding annual increments to its associate’s year-on-year, reinforcing its commitment to employee growth and long-term value creation.”
Separately, TCS recently disclosed in its annual report that CEO K Krithivasan received total remuneration of ₹28.1 crore in FY26, marking a 6.3% increase over the previous financial year. The compensation included ₹25 crore in commission alongside salary, benefits and allowances.
The disclosure drew attention because the company’s workforce declined by more than 23,000 employees during the same period. TCS ended FY26 with approximately 5.84 lakh employees, down from 6.07 lakh a year earlier.
According to the annual report, Krithivasan’s pay stood at 332.8 times the median salary of TCS employees. Meanwhile, Chief Operating Officer Aarthi Subramanian received ₹18.3 crore in total remuneration during FY26.
TCS maintained that compensation revisions were aligned with market practices and employee performance metrics. The company said salary hikes for junior and mid-level employees generally ranged between 5% and 8%, with stronger performers receiving double-digit increments in select cases.
Financially, the company reported mixed results for FY26. Net profit for the March quarter rose 12.22% to ₹13,718 crore, while annual profit growth remained relatively modest at 1.35%, reaching ₹49,210 crore. Revenue from operations increased 4.58% year-on-year to ₹2.67 lakh crore.