Deferring wage hikes prudent in current business environment: TCS CHRO Milind Lakkad 

Milind Lakkad, CHRO, TCS

India's largest IT services player Tata Consultancy Services (TCS) hired 42,000 freshers in FY25, a tad above its target of 40,000, and remains optimistic about crossing this threshold in FY26 as well.

Chief human resources officer (CHRO) Milind Lakkad, however,  was cautious when he announced that the company would delay its wage hike cycle in the current fiscal amid macroeconomic headwinds and uncertainties arising out of US President Donald Trump’s tariffs.

At the end of FY25, TCS’ headcount stood at 607,979, a net increase of only about 6,433 employees from the previous fiscal.

In an interview to Moneycontrol, Lakkad, who retires in a few months and will be succeeded by Sudeep Kunnumal, spoke about some of these contradictions, shared his outlook on the impact of artificial intelligence (AI) on hiring and deployment, concerns around H-1B visa policy changes and more. Edited excerpts:

In FY25, you hired 2,000 more freshers than your projected 40,000 and have a target to exceed the figure in FY26 as well. What’s driving this? Is hiring still a good measure to understand demand?

See hiring and demand is definitely linked but not by every quarter. You should not compare hiring and demand for every quarter. We hire people upfront and then we train them and then they get leveraged in billable assignments in subsequent quarters.

But wage hikes are getting delayed this year, the second time since Covid? How should we read into this?

This only happened for a second time. I will not call it a delay or deferment. I am just saying that we will watch this environment every day, every week, every month and make a call on what is the first thing that we need to do in terms of giving the wage hikes.

That is the call which we are taking after looking into the overall business environment.

We do not like to do this at TCS but considering the overall business issue, we thought it would be a prudent thing to do it this time.

As CHRO, is it more challenging now to plan how many people you are going to hire during the year, given that there are so many moving parts like the Trump tariffs and AI, which is leading to uncertainty among clients? Do you still think it is pragmatic to have annual hiring targets?

I think it still does for us because to some extent, there is a definite need for soft-linking demand and supply.

You can hire from the market based on the demand every quarter or every other quarter. But I think hiring from the campus and getting the campus hires into the ecosystem, training them properly and getting them into our work environment has worked very well for us and that will continue.

And considering the overall business scenario, we have a certain attrition that happens every quarter anyway. And we have to also think about that in addition to growth. So, growth and attrition together fulfilling at least this basic requirement happens without hard-linking it to demand is an important element of our business model.

Are you using AI to write code? How are you setting the checks for engineers?

Definitely the pace has increased. The number of engagements where we are using AI to develop code or to test code or to do documentation or very customer specific call centre type of situations where we can use Gen AI properly have gone up.

All of these things are happening across the board, across different types of engagements. Some of these are where a customer is trying out things in a specific business process situation. Some of them are at a lot more mature stage. It is a mix of many things which is evolving as we speak.

We are hearing from Silicon Valley AI startups that they are able to get 10x more productivity with fewer engineers. As an IT industry veteran, are you worried about the second-order effect AI will have on white collar jobs in India because outside of railways, the IT industry is the biggest private sector job creator in the country?

A real-life example is happening at TCS today. Earlier, certain projects such as migration to state-of-the-art cloud environment was not happening for less than 50 million lines of codes. But today, customers are thinking about it seriously because now with Gen AI and everything else coming in and with the kind of tools we have, it is a lot more practical and feasible to do these kind of things than ever before.

So, the opportunity which never existed has now opened up. The opportunity which would have cost the customer 2x or let's say X, now may cost X/2. I have a pipeline of 10 of these opportunities.

While I am able to deliver, customers are also opening up to something new because they now have the comfort of doing this with the new technology and they are not thinking that this is too risky.

Amid slowing margins and focus on utilisation rates, will bench holding timelines going down become more common? According to industry data, it’s already down to 35-45 days on average in the past couple of years as compared to 45-60 days before that?

Maintaining a certain bench is very strategic. At the same time, not having too much bench is also important. The solution to that is basically to have a very close engagement with our people, making sure that they get the right talent development and thereby, getting to a billable engagement at the earliest rather than doing any other measures, which we normally don't do.

Any new technology will not make that management any different than what it is. It has been the same over the years.

Do you see the uncertainty around the US policies leading to more offshoring? Are you reducing on-site consciously because of the uncertainty around visas? How do you view this?

We are not doing that. We believe that our model is visa agnostic.

We do have to get H-1B visas every year and we got this year as well. But we obviously have a very robust hiring model in all countries, including the US. We continue to hire workforce from the campus and from the market in the US.

I don't see that changing in the current context at all. In fact, it is a right thing to happen to have this kind of a robust model given any situation and environment.

When you are hiring freshers has the bar gone up? Do you expect them to already have some AI skills or perhaps have some knowledge of machine learning?

So in FY25, we hired 40 percent digital hires compared to 17 percent in FY24. So, when we say digital hires, they definitely have much higher level of skillsets including AI.

But needless to say, even for the ones who do not have and we get them in, there are enough talent development opportunities within TCS to get them to that level as well.

How is the hiring strategy in TCS going to change in FY26 with this whole AI disruption?

We continue to get higher order skills on the campus and we continue to have strong talent development across the board. Last year, we got about 50 percent of our lateral hires from the market with high-end skills. So, all of these things we have been doing already. The proportion of it may change a few percent here and there but the fundamentals remain the same.

Even from the campus, we have to make sure that we get the right mix, so that we have the right talent.

Overall headcount went up by 6,433 in FY25, while it was down more than 13,000 in the previous fiscal. Is there a range that you will aim to hire in FY26?

I think what I look into is I have to hire good people from the campus. And, I will hire good niche skills from the market every quarter based on the business need.

There will be certain attrition. I have to basically make sure that attrition is in my desired band. I have to make sure that I do both of these things right. The resultant number is an outcome and not something which we shoot for or which we aim for.