Tata Consultancy Services (TCS), India’s largest IT services firm, has reaffirmed its commitment to delivering wage hikes for its 600,000+ employees, despite macroeconomic headwinds and margin pressures.
Speaking after the release of the Q1 FY26 results, Chief Financial Officer Samir Seksaria emphasized that employee compensation remains a top priority, stating, “My priority is getting back to the wage hike”.
The company had deferred its annual salary revisions, typically effective from April, due to demand softness and geopolitical uncertainties.
Samir clarified that while no timeline has been announced, TCS has “rarely resorted to deferring wage hikes unlike peers”.
TCS Margin Management and Profitability Goals
TCS reported a 0.20% decline in operating margins, settling at 24.5% for the June quarter.
Samir acknowledged that annual wage hikes typically compress margins by 1.5%, but reiterated the company’s aspiration to push margins into the 26–28% range.
He attributed the margin squeeze to upfront hiring and lower utilization levels, driven by subdued demand.
“If demand recovery is prolonged, we will double down on optimization,” he said, highlighting a dual strategy of demand recovery and internal efficiency.
TCS Talent Retention Over Lateral Hiring
With attrition rising to 13.8%, TCS is shifting focus to retaining top talent rather than expanding headcount through lateral hiring.
Samir noted that fresh hiring cannot easily replace experienced talent, and some attrition is “healthy” for organizational renewal.
Given current capacity, the company may go slow on lateral hiring and resume once demand picks up.
This approach aligns with TCS’s broader strategy of balancing workforce optimization with long-term capability building.
Growth with Profitability: A Balanced Approach
Samir stressed that TCS’s strategic focus remains on growth with profitability, not profitability alone.
“Only profitability without growth doesn’t help,” he said, underscoring the importance of sustainable expansion even amid economic uncertainty.
The company reported a 6% rise in net profit to ₹12,760 crore, aided by non-core income, while revenue grew 1.3% YoY to ₹63,437 crore.
Samir confirmed that investments will continue, though with realignments—such as partial infrastructure development—to optimize capital deployment.
Inorganic Growth and Strategic Acquisitions
TCS is open to capability-driven acquisitions, but Samir clarified that the company will not pursue deals merely to boost topline.
“We keep looking at opportunities in the market,” he said, indicating a disciplined approach to M&A focused on strategic fit rather than scale.
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