Tata Consultancy Services (TCS) will raise salaries for the majority of its employees beginning September 1, the company announced in an internal memo.

"We are pleased to announce a compensation revision for all eligible associates in grades up to C3A and equivalent, covering 80 percent of our workforce," said Chief Human Resources Officer Milind Lakkad and CHRO-designate K Sudeep in a message.

Key Highlights

• TCS delayed April’s wage review and now plans to raise salaries for 80% of employees from September 1. 
• The pay revision applies to employees up to grade C3A, even as over 12,000 mid- and senior-level staff are laid off.

TCS was the first company to postpone hikes in April, citing an unfavorable and uncertain macroeconomic environment. It maintained this stance even last month, when it announced its second-quarter results, stating that a decision would be made at the appropriate time.

TCS's grade structure starts with Y for trainees, moves on to C1 for systems engineers, then C2, C3A and B, C4, C5, and finally CXO. Employees in the C3 category are typically regarded as senior staff.

However, in July, the company announced plans to cut about 2% of its workforce, or approximately 12,000 employees, citing the inability to deploy them on projects due to rapidly evolving AI skill sets.

Also Read: TeamLease Predicts 6.2%-11.3% Salary Hikes Across Industries

These employees, mostly mid- to senior-level managers who had been with the company for decades, were laid off as TCS sought to protect its dwindling operating margins.

Analysts predicted last week that the retrenchment would allow the company to raise salaries for its remaining employees.

The decision to revise salaries will provide much-needed relief to TCS employees, and other companies may follow suit. Cognizant, which was scheduled to implement salary increases on August 1, has also stated that it will decide on the timing of increases in the second half of its fiscal year, with the goal of covering the majority of employees.