India’s largest IT services company, Tata Consultancy Services (TCS), is facing criticism from some employees after its latest appraisal cycle reportedly resulted in lower take-home salaries despite announced salary hikes.
TCS recently rolled out average salary increases of around 5% to 8% for FY26. However, several employees claimed that restructuring of salary components and changes in variable pay calculations actually reduced their monthly in-hand income.
The issue quickly gained attention across social media and employee discussion forumsespecially after reports revealed that TCS CEO K Krithivasan earned over ₹28 crore during FY26.
The contrast between executive compensation growth and employee dissatisfaction has triggered intense debate within India’s IT sector.
Why Employees Say Their Salaries Fell
According to reports, the changes are linked to TCS restructuring its compensation framework to align with India’s upcoming labour code regulations.
Employees allege that while total compensation on paper may have increased, adjustments in salary components, allowances, deductions, and variable payouts resulted in lower monthly earnings for some workers.
Some employees also claimed that attendance and work-from-office compliance affected portions of their variable pay.
The controversy highlights how salary restructuring can sometimes create a disconnect between “announced hikes” and actual take-home income experienced by employees.
TCS Says Changes Are Linked To Labour Code Compliance
TCS has reportedly maintained that the revised salary structure was designed to standardize wages and align with future labour code requirements.
India’s new labour regulations are expected to impact salary structures across corporate sectors by changing the balance between basic pay, allowances, PF contributions, gratuity calculations, and other compensation elements.
While such restructuring may increase long-term retirement and statutory benefits for employees, some workers say the immediate impact has reduced disposable monthly income.
Industry experts note that many companies may face similar employee reactions as labour code implementation gradually progresses.
CEO Compensation Sparks Online Debate
The controversy intensified further after disclosures showed TCS CEO K Krithivasan earned more than ₹28 crore during FY26.
According to reports, the CEO’s compensation was several hundred times higher than the median employee salary within the company.
The timing of the disclosure fueled online discussions around:
- Executive compensation gaps
- Employee satisfaction
- IT sector wage growth
- Profit distribution
- Corporate transparency
Some users argued that rising executive pay alongside employee complaints could hurt morale, especially during a period when the broader IT industry is already witnessing hiring slowdowns and AI-driven workforce restructuring.
Salary Structure Comparison
| Component | Traditional Salary Structure | Revised Structure Under Labour Code Alignment |
|---|---|---|
| Basic Pay | Lower proportion | Higher proportion |
| PF Contribution | Lower | Higher |
| Allowances | Higher | Reduced |
| Variable Pay Impact | Moderate | Higher influence |
| Monthly Take-Home Salary | Often higher | Can reduce temporarily |
| Long-Term Benefits | Lower | Potentially improved |
The table reflects why some employees may experience lower immediate payouts despite long-term statutory benefit improvements.
IT Industry Already Facing Workforce Anxiety
The salary controversy comes at a sensitive time for India’s technology sector.
The IT industry is currently dealing with:
- AI-driven automation
- Slower global hiring
- Reduced fresher onboarding
- Cost optimization pressure
- Increased performance monitoring
- Hybrid work policy tensions
Many technology professionals are already concerned about career growth, compensation stability, and changing workplace expectations.
As a result, even relatively small payroll-related changes are receiving amplified attention among employees.
AI Transition Increasing Corporate Pressure
TCS, like many global IT firms, is aggressively investing in artificial intelligence and enterprise AI solutions.
Companies worldwide are currently trying to balance:
- Profitability
- AI investments
- Workforce costs
- Employee retention
- Shareholder expectations
Experts believe this balancing act may increasingly shape compensation decisions across the technology industry over the next few years.
The TCS situation reflects a broader shift happening globally, where companies are redesigning workforce structures and salary frameworks amid rapid technological transformation.
Bigger Debate Around Transparency Emerging
The controversy has also triggered wider discussions around how companies communicate salary hikes and compensation restructuring.
Employees often focus primarily on take-home salary, while organizations may evaluate compensation through total cost-to-company structures and long-term benefits.
Experts believe clearer communication and transparency will become increasingly important as labour codes, AI-driven restructuring, and evolving compensation models continue reshaping India’s corporate workforce ecosystem.
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