Tata Consultancy Services (TCS), India’s largest information technology services firm, has announced a deferral of employee salary hikes for the financial year 2025, citing a volatile business environment exacerbated by ongoing macroeconomic uncertainties and the evolving tariff landscape between the United States and other countries. This decision, made public during the company’s post-Q4 earnings press conference in Mumbai on April 10, 2025, reflects a cautious approach amid growing concerns in the IT sector.
Chief Human Resources Officer Milind Lakkad emphasized that the timing and extent of potential wage hikes will be evaluated throughout the year, depending on how the business environment evolves. “Because of the uncertain environment, we will decide during the year on wage hikes. It can be at any time, depending on business,” he stated. This cautious stance echoes a similar decision made five years ago during the onset of the COVID-19 pandemic, when TCS had to navigate significant disruptions in global business.
Despite the postponement of salary increases, TCS plans to maintain its hiring momentum, having onboarded 42,000 freshers in FY25. Lakkad indicated that the company aims to hire a similar or potentially higher number of engineers from campuses in FY26, demonstrating a commitment to nurturing new talent even in uncertain times. During the fourth quarter of FY25, TCS added 625 employees, bringing its total workforce to 607,979, a net increase of 6,433 employees over the year, reversing a decline from the previous year.
In terms of financial performance, TCS reported a consolidated net profit of Rs 12,224 crore for the fourth quarter ending March 31, 2025, marking a 1.7% decline from Rs 12,434 crore in the same quarter of the previous year. This result fell short of analysts' expectations, which had projected a profit of Rs 12,650 crore. On a brighter note, revenue from operations rose by 5.3% year-on-year to Rs 64,479 crore, although this figure also missed the estimate of Rs 64,856 crore according to the ET NOW poll.
Looking at the full financial year, TCS reported a net profit increase of 5.8%, totaling Rs 48,553 crore, while annual revenue reached Rs 255,342 crore, up 6% year-on-year. This achievement marked TCS’s crossing of the $30 billion revenue threshold, a significant milestone for the company. The total contract value (TCV) for the fourth quarter stood at $12.2 billion, demonstrating a robust order book and a healthy book-to-bill ratio of 1.6.
However, the company is navigating challenges, including delays in client spending and project ramp-ups as customers reassess their budgets in light of the tariff issues. CEO K Krithivasan noted that the IT sector is experiencing tightened budgets, leading to a slowdown in discretionary spending. “There will be delays in discretionary spending if this continues,” he warned, highlighting the need for caution in financial decision-making.
Despite these challenges, TCS’s attrition rate has seen a slight increase, rising to 13.3% in Q4 FY25 from 13% in the previous quarter. However, Lakkad expressed confidence in the company’s ability to manage employee retention, noting that while the attrition rate has marginally increased, the quarterly annualized attrition rate has improved by 130 basis points.
In a strategic move to bolster its leadership team, TCS announced two key appointments: Aarthi Subramanian as the new Chief Operating Officer (COO) and Mangesh Sathe as Chief Strategy Officer. Subramanian, who previously served as the Chief Digital Officer at Tata Sons, will take on her new role starting May 1, 2025. Sathe, formerly CEO of Tata Strategic Management Group, will lead TCS’s global consulting practice and oversee mergers and acquisitions. Both executives will report directly to CEO Krithivasan.
Krithivasan described these appointments as part of a broader strategic exercise aimed at enhancing the company’s capabilities in light of major shifts in technology. “In some of these areas, we can’t rely solely on homegrown talent. To expand and maintain leadership, we need to build talent and partnerships,” he said.
As TCS navigates these turbulent waters, its commitment to hiring fresh talent and managing attrition may provide reassurance to stakeholders. The company’s measured approach signals a strategic alignment with the global market outlook, aiming to sustain long-term competitiveness while addressing current uncertainties. With a focus on maintaining operational efficiency and nurturing talent, TCS is poised to adapt to the evolving business landscape, ensuring it remains a leader in the IT services sector.
