TCS Says Layoff Phase Is Over, Restores Annual Salary Hikes as Workforce Stability Returns
Tata Consultancy Services (TCS) has announced that its layoff and restructuring phase is now complete and the company is returning to its regular annual salary increment cycle, bringing relief to employees after a year of uncertainty. TCS confirmed annual increments effective from April 1, with top performers receiving double-digit hikes while most employees are expected to receive increases between 4.5% and 7%. Despite a yearly workforce decline of 23,460 employees, bringing total headcount to 5.84 lakh, the company clarified that much of the reduction came from natural attrition and restructuring rather than direct layoffs. TCS continues aggressive fresher hiring, with 25,000 campus offers already made and plans to hire around 40,000 freshers annually, while also expanding its focus on AI, cloud and digital transformation services.
Tata Consultancy Services (TCS) has said its layoff phase is now over and the company is returning to its regular annual salary increment cycle, signaling a move back toward workforce stability after a year marked by restructuring, tighter bench policies and employee uncertainty.
The company had earlier announced plans to reduce around 2 percent of its workforce as part of an internal restructuring exercise aimed at aligning talent with changing business needs, especially around AI adoption and slower global demand. This led to exits across several mid- and senior-level roles, along with concerns among employees over delayed salary hikes and job security. TCS has now confirmed that this restructuring phase has been completed and annual increments are being restored under its normal appraisal process.
According to TCS Chief Human Resources Officer Sudeep Kunnumal, annual increments have been announced for all eligible employees, with top performers expected to receive double-digit salary hikes. For most employees, increments are generally expected to fall in the range of 4.5 percent to 7 percent depending on performance ratings and job grade. This marks a return to the company’s traditional April salary revision cycle after the previous cycle had been delayed by several months and rolled out later in the year.
Despite reporting a decline of more than 23,000 employees in FY2026, TCS has clarified that the drop in headcount cannot be entirely attributed to layoffs. The company ended the year with a workforce of 584,519 employees, down by 23,460 compared to the previous year. However, Kunnumal said TCS continues to invest heavily in fresh talent and remains one of India’s largest recruiters. The company has already made 25,000 campus offers in India and is still on track to hire around 40,000 freshers annually. In FY2025, it had onboarded 44,000 trainees. TCS also added 2,356 employees sequentially in the fourth quarter through a combination of fresher intake and lateral hiring.
Chief Executive Officer K Krithivasan said the company is entering the new financial year with stronger momentum after facing pressure earlier. He acknowledged that the first quarter was weaker due to the completion of a major transformation program, but the following three quarters showed recovery. He also highlighted a strong order book, several large deal wins and better performance across international markets as reasons for renewed confidence. TCS has signed multiple major deals recently and added four new clients with annual revenue of more than $100 million, which is expected to support growth in the coming quarters.
The company is also increasing its focus on artificial intelligence and digital transformation services. TCS reported AI-related revenue of more than $2.3 billion in the fourth quarter and has partnered with companies including OpenAI and AMD on AI-powered data center projects. Leadership has maintained that enterprises will continue to need IT services firms like TCS to implement and scale AI effectively, despite concerns that automation could reduce traditional outsourcing demand.
In the March quarter, TCS posted a 12.2 percent year-on-year rise in net profit to Rs 13,718 crore, while revenue increased 9.6 percent to Rs 70,698 crore. However, the company also recorded a 2.4 percent decline in annual revenue in constant currency terms for FY2026, its first such annual decline since going public. This makes the return to normal salary hikes especially significant, as it suggests TCS is trying to balance cost discipline with employee retention and morale.
At the same time, TCS continues to face reputational pressure from the Nashik BPO controversy, where allegations involving workplace harassment and HR oversight have drawn significant attention. While the investigation is ongoing, the timing adds another layer of scrutiny as the company works to restore confidence both internally and externally.
For employees, however, the message from TCS is clear: the restructuring phase is over, the worst may be behind them and the company wants to return to predictability in compensation, hiring and long-term career planning.
