TCS Revamps Salary Structure; Here’s What HR Said in Q1 FY27

Tata Consultancy Services (TCS) has revised the salary structure of its India-based employees to align with the requirements of the country’s new labour code, marking a significant shift in how employee compensation is structured.

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While the overall Cost to Company (CTC) remains unchanged, the restructured salary components are expected to influence employees’ monthly take-home pay as well as their long-term retirement and statutory benefits.

The move comes as organisations prepare for the implementation of the new wage framework, which mandates that basic pay and dearness allowance (DA) together should constitute at least 50% of an employee’s total remuneration.

Traditionally, many companies, including those in the IT sector, have maintained a lower basic salary while allocating a larger share of compensation to various allowances. This helped optimise statutory payouts such as provident fund (PF) contributions.

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What Has Changed?

The announcement was made during TCS’ first-quarter (Q1 FY27) earnings presentation. Commenting on the development, Sudeep Kunnumal, Chief Human Resources Officer at TCS, said,

This quarter, we completed annual salary increments for all associates globally and aligned salary structures with the new India Labour Code requirements.

Kunnumal added that the company remains committed to strengthening its future-ready workforce by investing in AI infrastructure and next-generation learning platforms. He said TCS is also focused on fostering an inclusive workplace where employees feel “safe, valued, trusted and empowered to grow.”

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To comply with the revised wage norms, TCS has rebalanced its salary structure by increasing the basic pay component and correspondingly reducing certain allowances.

The company has clarified that the restructuring does not increase or reduce an employee’s overall CTC but is intended to ensure compliance with the evolving regulatory framework and bring greater consistency to compensation practices.

Employees have reportedly begun receiving revised salary break-ups reflecting the new structure.

What It Means for Employees

For many employees, the immediate impact may be a modest reduction in monthly take-home salary because provident fund contributions are calculated on basic pay.

As the basic salary rises, both employee and employer PF contributions increase, resulting in higher deductions from monthly pay.

However, the changes also strengthen employees’ long-term financial security. A higher basic salary translates into larger provident fund savings, increased gratuity payouts, and improved retirement benefits over the course of an employee’s career.

Other statutory payments linked to basic wages could also see an upward revision.

While some employees may initially focus on the impact on their in-hand salary, HR experts believe the revised structure offers stronger social security benefits and aligns compensation with the government’s broader objective of enhancing employee welfare under the new labour code.

TCS’s move is expected to be closely watched across the IT industry, with several organisations likely to undertake similar restructuring exercises as they prepare for the eventual rollout of the new labour code provisions across India.

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