Tata Consultancy Services (TCS), India’s largest IT services exporter, has deferred its decision on annual salary hikes, once again leaving employees in uncertainty. During the Q1FY26 earnings press briefing, Chief Human Resources Officer Milind Lakkad stated, “We have not decided on that front yet… we’ll let you know as soon as we do.”
This follows an April announcement where TCS had indicated potential deferrals due to a challenging business environment.
Rising Attrition Amid Pay Uncertainty
The salary decision delay comes as attrition inches upward, reaching 13.8% in Q1, up from 13.3% in the March quarter and 13% in the December quarter. Despite this, TCS reported a net headcount increase to 613,069 employees as of June 30, 2025, up from 607,979 in the previous quarter.
The company continues to back its fresher hiring target of 40,000 for the year, indicating a cautious but steady recruitment approach.
Q1FY26 Performance: Tepid Growth, Rising Costs
TCS reported Rs 12,760 crore net profit for the June quarter, reflecting a 6% YoY growth, but revenue growth remained sluggish at just 1.3% YoY, reaching Rs 63,437 crore. In constant currency terms, revenue declined by 3%, with deal momentum weakening amid global economic uncertainties, especially due to US trade tariffs.
Notably, employee benefit expenses rose 3.6% YoY to Rs 37,715 crore, while total expenses went up 1.6% to Rs 48,118 crore.
Compensation Letters Still on Hold
In February, TCS had reportedly assured employees that annual compensation letters would be released by March, with hikes expected in the 4–8% range. However, no further updates have followed, causing discontent among staff, especially amid rising living costs and inflation.
Market Reaction
As of 1:22 p.m. post-results, TCS shares were down 3.23%, trading at Rs 3,272.90 per share, while the Sensex dropped 0.79%, reflecting investor concern over muted earnings and HR-related uncertainty.
Conclusion: Waiting Game Continues for TCS Employees
While TCS continues to hire and maintain profitability, the delay in compensation decisions amid rising attrition paints a mixed picture. Employees and investors alike now await clarity on salary revisions as FY26 unfolds under economic pressure.
