TCS Likely To Suspend Salary Hikes, Freeze Hiring Amid Cost-Cutting Drive: Report
Tata Consultancy Services (TCS) is likely to initiate a sweeping cost-cutting overhaul, freezing hiring of experienced professionals and suspending annual salary hikes worldwide, according to a report by The Economic Times.
The development comes close on the heels of the company's decision to lay off around 12,000 employees, a move that has sent ripples across the IT sector. TCS has also tightened its internal policies for benched employees, staffers not currently assigned to any client project. These employees now have just 35 days to secure a billable assignment or exit the company, and the phased reduction of such staff is already underway in cities like Hyderabad, Pune, Chennai, and Kolkata.
ET report said.
These changes are part of a broader operational reset prompted by global macroeconomic uncertainty and subdued trade sentiment. An internal communication to employees cited the need to manage costs more aggressively to maintain competitiveness.
A senior IT analyst quoted in the report estimated that the layoffs at mid- and senior levels alone could help TCS save $300-400 million annually, equivalent to around Rs 2,400-3,600 crore, providing a 100-150 basis point boost to operating margins.
Despite the major shake-up, TCS CEO is reported to have assured that the layoffs will be implemented gradually, minimising immediate disruption.
The restructuring has sparked concern across the Indian IT industry, with analysts calling it a warning signal of deeper structural changes. Brokerage firm Jefferies described the development as a 'canary in the coal mine" moment, suggesting that rising AI adoption and cost-focused contracts are prompting IT firms to do more with fewer people.
The firm also warned that while the strategy might improve margins, it could lead to execution challenges and higher attrition in the long run.
TCS stock performance reflects the pressure. It has fallen nearly 30% over the past year, making it one of the weakest performers in the Nifty IT index. On a year-to-date basis, the stock is down 25%, with nearly 12% lost in just the past month.
As India's largest IT services company tightens its belt, the industry is bracing for further changes that may reshape hiring, compensation, and workforce strategy across the sector.
TCS lost Rs 28,148.72 crore from its market valuation in two days after the company announced that it will lay off about 12,000 employees of its global workforce this year. Its mcap stands at nearly Rs 11,05,886.54 crore.
The IT giant is set to lay off about 2 per cent, or 12,261 employees, of its global workforce this year, with the majority of those impacted belonging to middle and senior grades.
As of June 30, 2025, the TCS workforce stood at 6,13,069. It increased its workforce by 5,000 in the recently concluded June quarter.
The layoffs are part of the company's broader strategy to become a 'future-ready organisation", focusing on investments in technology, AI deployment, market expansion, and workforce realignment, TCS said in a statement.
'Towards this, a number of reskilling and redeployment initiatives have been underway. As part of this journey, we will also be releasing associates from the organisation whose deployment may not be feasible. This will impact about 2 per cent of our global workforce, primarily in the middle and the senior grades, over the course of the year," it said.
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July 30, 2025, 13:06 IST
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