TCS salary hikes for 600,000 employees delayed, not dropped: CFO

India’s largest IT services company, Tata Consultancy Services (TCS), has reaffirmed its commitment to employee welfare, with Chief Financial Officer Samir Seksaria stating that wage hikes for its 600,000-strong workforce remain a top priority.

Speaking to Press Trust of India (PTI) following the company’s June quarter results, Seksaria addressed concerns around profitability, hiring, and operational efficiency, while making it clear that despite current challenges, employees' annual salary increments are not being sidelined.

“Wage hikes are a priority for us,” said Seksaria. “While there are challenges in terms of growth and margins, we are committed to ensuring our employees are rewarded fairly. Our people are at the core of what we do.”

TCS typically rolls out its annual wage hikes from April each year. However, due to ongoing global economic uncertainty and geopolitical concerns, the company deferred the 2025 cycle. Seksaria acknowledged this delay but reaffirmed that the hikes would be implemented soon, stressing that the company remains firmly committed to employee remuneration.

Salary hikes usually impact TCS's operating margins by approximately 1.50%. In the June quarter, the company managed to limit the impact, reporting an operating margin of 24.5%. Seksaria explained that managing this balance—between investing in employees and maintaining profitability—remains central to TCS’s long-term strategy.

“Our target margin band remains 26–28%. We’re working towards getting back into that range,” he said.

Balancing Profitability and Talent Retention

With attrition at 13.8%, up slightly from previous quarters, the company is increasingly focused on retaining top talent rather than aggressive external hiring. Seksaria acknowledged the challenges posed by attrition but emphasised a shift in the company’s approach.

“We are prioritising the retention of our best talent. Expanding headcount for the sake of it is not our objective,” he noted.

The company already has sufficient capacity in terms of headcount and will only consider ramping up lateral hiring if there is a meaningful uptick in demand.

This reflects a more cautious stance from TCS, aligned with broader trends in the IT industry, where companies are recalibrating hiring strategies in response to uncertain macroeconomic conditions.

Seksaria indicated that the company continues to invest in hiring and training to meet potential future demand, even if this temporarily weighs on margins.

“Demand is not something we can control. But we can control how efficiently we run our business,” he said. “Our focus is on expansion that is both strategic and profitable.”

To this end, TCS is also exploring investments and acquisitions that are aligned with capability development rather than scale alone. Seksaria made it clear that the company is not chasing growth for its own sake but is interested in acquisitions that strengthen technological capabilities and industry expertise.

“Our strategy on acquisitions remains steady. We’re looking at capability-driven deals that can offer long-term value,” he said.

A Strategic Long-Term View

Despite some margin compression and an uncertain global outlook, TCS’s CFO painted a picture of cautious optimism. The company is not retreating from investment, but is instead taking a measured approach to where and how it allocates resources.

This includes continued focus on employee engagement and welfare, which Seksaria sees as inseparable from long-term business success.

“Our employees have always been the foundation of our success. Wage hikes, career development, and retention are not optional—they’re essential,” he reiterated.

While the tech industry globally has witnessed layoffs, wage freezes, and reduced hiring in recent quarters, TCS’s approach stands out as one of long-term commitment, even amid near-term financial headwinds.

As companies across the IT sector grapple with inflationary pressures, investor expectations, and evolving customer demands, TCS appears determined to navigate the storm while staying anchored in its people-first philosophy.

With its next earnings cycle on the horizon, all eyes will be on how soon TCS rolls out the deferred wage hikes and whether its strategy pays off in improved talent retention and operational performance.