Tata Consultancy Services announced salary hikes for the 2026 fiscal year effective April 1 [1], [2].

The move comes as the company attempts to balance cost discipline with the need to reward high-performing staff while managing a declining headcount.

Reports indicate an average annual salary hike of five percent [1]. However, the distribution of these raises varies significantly based on performance ratings. Top performers are reported to receive increases of approximately 10% [1], with some reports placing those raises as high as 13% [3].

Conversely, the company is implementing stricter performance standards. Approximately five percent of the workforce will be classified as under-performers [1]. This focus on performance occurs as the total workforce has dipped to 584,519 employees, a decrease of 23,460 people [2].

While the company aims to incentivize its best talent, the rollout has not been uniform across the organization. Some employees said they saw a decrease in take-home pay following the appraisals, with some citing a reduction of ₹3,000 [3].

TCS is utilizing these adjustments to enforce cost discipline in a challenging economic environment [4]. The strategy focuses on rewarding those who drive growth, particularly in areas like AI, while addressing the shrinking size of the overall staff [4].

“Average annual salary hike of 5%”

TCS is shifting toward a more aggressive performance-linked compensation model. By widening the gap between average raises and top-tier rewards, the company is attempting to retain critical talent in a competitive AI-driven market while simultaneously trimming costs by penalizing or exiting the bottom 5% of its workforce.