Cognizant announced merit-based salary hikes for 80% of its eligible employees effective November 1. The news is a positive turn for the IT industry, which has been beset by uncertainty and resorted to layoffs. The Indian-origin, US-headquartered company said its highest performers will be given payouts in the high-single-digit percentage range. This comes after the company deferred the increments by four months last year, offering them in August, with hikes ranging from 1-5%. This year, the raise has been delayed until November. Industry trends: IT bellwether Tata Consultancy Services (TCS) recently told employees it will raise salaries for 80% of its workforce effective September 1. The salary revisions, communicated through an internal email by chief human resources officer Milind Lakkad and CHRO designate K Sudeep, are for employees in grades up to C3A and equivalent, primarily covering junior and mid-level staff. Rival Infosys, the second-largest homegrown IT company, implemented a wage hike in April but has not yet decided on the next pay hike for its employees. In May, Infosys released performance bonus letters for eligible employees for the January-March (Q4FY2024-25) quarter. Much of the workforce saw the payout as being significantly lower than the previous one. Similarly, Wipro disbursed increments last September. The company has said it will decide on salary increases after assessing the demand scenario. Alongside the pay hikes, TCS is implementing one of its largest-ever layoffs, impacting around 12,000 employees or roughly 2% of its global workforce. The layoffs will run till the end of FY26, mainly targeting mid- and senior-level professionals. The company's rationale links the layoffs to skill mismatches and redeployment challenges, compounded by its drive to be ‘future-ready’ through AI. This state of affairs has sparked a larger conversation: Will others follow suit? So far, this fiscal year, no other Indian IT company has announced layoffs on the same scale. Infosys let go of some trainees who failed to clear assessment tests, but their number was in the hundreds. India’s top IT companies saw a significant drop in net workforce additions in the first quarter of FY26 (Q1 FY26), indicating a cautious approach to hiring across the sector. While a few companies showed marginal improvement, the overall trend points toward reduced recruitment momentum.

Cognizant announces salary hikes amid uncertainty in IT industry

Cognizant has announced merit-based salary hikes for 80% of its eligible employees, effective November 1, following a four-month delay from the previous year. The hikes range from high-single-digit percentages and target top performers. This move comes amid broader industry uncertainty, with peers like Tata Consultancy Services (TCS) also announcing salary increases for 80% of its workforce effective September 1, while simultaneously implementing one of its largest-ever layoffs affecting around 12,000 employees. Infosys implemented a wage hike in April and released performance bonuses in May, but has not announced a new salary increase. Wipro last raised salaries in September and has deferred further decisions. The IT sector as a whole has seen a significant drop in net workforce additions in Q1 FY26, reflecting cautious hiring practices. TCS's layoffs, driven by skill mismatches and a push toward AI-driven future-readiness, have sparked concerns about potential follow-up actions across the industry.