IT Giants Halt Salary Hikes in 2025 Amid Economic Pressures

May 6, 2025 — Bengaluru, India

India’s leading IT companies, including Tata Consultancy Services (TCS), Infosys, and LTIMindtree, have announced minimal to no salary increments for employees in the financial year 2024-25, citing global economic challenges and operational shifts. This decision has raised concerns among workers facing rising living costs, prompting debates about the sustainability of the sector’s workforce model.

According to the EY Future of Pay 2025 report, salary increments in the IT sector are expected to decline from 9.8% in 2024 to 9.6% in 2025, with IT-enabled services projected to fall from 9.2% to 9%. However, major firms are offering even lower raises. TCS plans to implement hikes ranging from 4% to 8% by March, compared to 7%-8% in FY24. Infosys is set to provide increments of 5%-7%, down from 7%-9% last year and significantly below the 10.5% offered in FY22. LTIMindtree has introduced a performance-based appraisal system, requiring senior employees to pass competency tests covering coding and analytical skills to qualify for raises.

The restrained approach to salary hikes is driven by several factors. A decline in global discretionary spending has reduced demand for IT services, impacting the revenues of top firms, as noted in a recent The Economic Times report. Additionally, advancements in automation and generative AI are enabling companies to optimize operations with smaller workforces. A Kotak Institutional Equities report projects industry revenue growth of 6%-7% in FY26, with clients increasingly seeking cost savings through AI-driven solutions, further pressuring firms to control expenses.

Employees are facing financial strain as inflation outpaces these modest raises. The Mint quoted an LTIMindtree employee expressing frustration over the new appraisal system: “After years of experience, being evaluated through standardized tests feels unfair and disconnected from our work.” Attrition rates reflect growing discontent, with TCS reporting a 13% turnover rate in Q3 despite adding 5,370 employees. TCS CEO K Krithivasan, during the Q3 earnings call, indicated that the company is managing workforce costs by allowing attrition to naturally reduce headcount.

The outlook for employees remains uncertain. While TCS plans to promote over 110,000 staff in FY25, many of these promotions come without significant pay increases. The EY report cautions that unlike previous economic cycles, IT firms may not benefit from increased outsourcing or market share gains, limiting their ability to offer competitive raises. Posts on X highlight employee dissatisfaction, with users like @KhabriBossLady noting, “No hikes, no bonuses—this is the reality for IT workers now.”

As IT giants prioritize cost efficiency, the lack of substantial salary increments could intensify talent retention challenges. With no immediate market recovery in sight, employees may explore opportunities elsewhere, potentially reshaping the industry’s workforce dynamics.

Sources: EY Future of Pay 2025 Report, The Economic Times, Mint, Kotak Institutional Equities, X posts