India’s largest IT company has slammed the brakes on pay hikes and hiring—escalating fears that a deeper shakeout is underway in the tech sector. Tata Consultancy Services has reportedly frozen lateral hiring and suspended annual salary increases across global markets, sending an ominous signal to an already jittery workforce.
According to an Economic Times report, the decisions were communicated via an internal email citing geopolitical tensions, weak demand, and macroeconomic uncertainty. Business Today could not independently verify the claims.
The announcement comes just weeks after TCS said it would lay off 12,000 employees—2% of its workforce—in its first major retrenchment in years. The freeze, along with project onboarding delays that now reportedly exceed 65 days for experienced hires, paints a stark picture of the pressure mounting inside the $200 billion IT industry.
Internally, TCS has reportedly begun phasing out hundreds of benched employees across cities like Hyderabad, Pune, Chennai, and Kolkata under a new policy that mandates finding a project within 35 days or facing termination. The firm has not yet commented on the report.
Employee unions have responded sharply. NITES, a tech workers’ welfare body, has written to the labour ministry for the third time, raising concerns over what it alleges are “illegal layoffs” and opaque bench policies.
Phil Fersht, CEO of HFS Research, said TCS “can’t afford that extra weight anymore,” adding that the cuts are likely aimed at trimming a bloated middle layer. “This is more of a warning sign to get their people to step it up,” he told ET.
Jefferies, in a recent analyst note, called this a “canary in the coal mine” moment. “The layoffs and hiring freeze reflect a weak demand environment and rising cost pressures,” it said, warning that companies unable to pivot to AI-led models may soon follow suit.
The TCS stock has slid nearly 30% in the past year—far worse than Infosys, Wipro, or HCLTech. The structural shift, analysts warn, is just beginning.
“The pyramid isn’t AI-ready,” a senior recruiter was quoted as saying in the report. “If it collapses, it won’t stop with TCS.”
