TCS Empowers Employees with Promotions, Even as Salary Hikes Take a Backseat
In a surprising yet strategic move, Tata Consultancy Services (TCS)—India’s largest IT services company—announced that it granted 1.1 lakh promotions in FY25, despite putting a temporary hold on its customary annual salary hikes. The decision was disclosed during the company’s Q4 earnings press conference held in Mumbai last week, on April 10, 2025.
While the deferment of merit pay raises might raise eyebrows, the company’s leaders emphasized that this was a carefully thought-out step to balance talent retention with business agility in a challenging economic climate.
A First in Recent History: TCS Freezes Annual Increments
TCS’s decision to defer the usual April increments marks a significant shift in its human resources policy. Historically known for its structured annual appraisal and increment cycle, this pause reflects the volatility of global IT demand and the company’s focus on operational efficiency.
Speaking on the matter, CHRO Milind Lakkad explained, “We believe promotions are a more impactful way to recognize and retain talent during these times. The nature of work is evolving rapidly, and we need leaders ready to adapt.”
Promoting Growth from Within: The Human Side of TCS’s Strategy
At the heart of this move is a deep understanding of employee motivation and career growth. While financial compensation remains important, recognition through promotions can be an equally strong driver of job satisfaction and long-term loyalty.
Promoting 1.1 lakh employees—nearly a quarter of TCS’s total workforce—is no small feat. It reflects a commitment to rewarding performance, enhancing internal mobility, and empowering the next generation of TCS leaders.
“Promotions signal trust and investment in our people,” said Lakkad. “It’s our way of saying—we believe in your potential.”
Freshers Still Welcome: 42,000 New Recruits Planned for FY26
Even as the company focuses on internal promotions, TCS is not slowing down its hiring engine. The IT giant plans to onboard 42,000 freshers in FY26, continuing at the same scale as the previous year.
This is a clear message of confidence in the future—despite current market turbulence, TCS is preparing for growth. The fresh hires will help fill gaps created by attrition and strengthen the digital skills base as the company pivots toward newer technologies.
In FY25, TCS saw an attrition rate of 13%, which is lower than industry averages and reflects a relatively stable workforce amid global uncertainties.
Digital Transformation Driving Talent Strategy
TCS’s evolving talent strategy is tightly aligned with its digital transformation priorities. According to Lakkad, “Last year, 40% of our hires were digital-focused, compared to 17% the year before. We need the right mix of experience and fresh skills to maintain our competitive edge.”
By promoting from within and hiring digital-ready talent, TCS aims to future-proof its operations, boost productivity, and maintain its status as a global IT powerhouse.
Cost Efficiency Without Compromising Morale
While salary hikes are deferred, TCS isn’t ignoring financial well-being altogether. CFO Samir Seksaria pointed out that targeted cost interventions, including selective merit-linked adjustments and promotions, have contributed to a 100 basis point improvement in operational metrics.
It’s a delicate balancing act: cutting costs without eroding employee trust. So far, it seems to be working. The company continues to enjoy strong employee engagement, and the promotions are likely to mitigate dissatisfaction over the increment pause.
A Human-Centric Approach to Uncertain Times
In a world where many companies respond to market stress with layoffs or aggressive cost-cutting, TCS’s approach stands out. By choosing to invest in its people through promotions and continued hiring, the company is demonstrating that employee trust and growth are non-negotiable pillars of its strategy.
Sure, the increment deferral might sting in the short term. But in the long run, promotions and career growth speak louder than pay hikes alone.
For thousands of TCS employees, this recognition is a moment of pride—and a reminder that resilience, performance, and loyalty are still rewarded in today’s corporate world.
