TCS: A Tale of Stock-Price-Driven Indian Corporates
Zero Wage Hike for 6 Lakh Employees
72.63% Dividend Hike for Shareholders (FY24 vs. FY25)
Who is the Beneficiary of this Generosity? Tata Sons (71.7% Shareholding of TCS)
If the company’s growth is flat, what was the need to increase dividend payout by 72.63% when the company is unable to give a salary hike of even 1% to its six lakh employees?
The company argues the future looks uncertain, so the salary hike is frozen from April 2025 onwards (FY26).
Do you wish to know how much was TCS Salary Hike in the previous year (FY25)? 2.91%.
Sounds hard to believe? Look at these figures from the latest TCS financial statements:
Employee Salary Cost in FY24: Rs. 1,40,131 crore
Employee Salary Cost in FY25: Rs. 1,45,788 crore (with 6,433 additional employees hired in FY25)
Average Per Employee Wage Increase YoY (Adjusted for Headcount) = 2.91%
In other words, this is the second consecutive year when the average salary increase for TCS employees remains nearly zero.
Now compare this against inflation in the last two years, and you will know what’s happening with the economy at the ground level.
The Final Part: Imagine This
TCS Dividend Paid in FY24: Rs. 26,426 crore
TCS Dividend Paid in FY25: Rs. 45,612 crore
(Difference) Increase in Dividend in FY25: Rs. 19,186 crore (72.63%)
Imagine if this excess dividend of Rs. 19,186 crore was distributed to 6 lakh employees instead of the shareholders. The shareholders would still have received the same dividend as the previous year (Rs. 26,426 crore).
But guess what would be the average salary hike per employee? 13.16%
TCS engineers can cross-check this simple calculation themselves.
Why TCS Didn’t Do This?
Dividend is not an “expense” in the P&L account. But “Salary” is an expense. So, if salary is increased instead of dividend, shareholders become unhappy.
To maintain the stock price, a company must either show growth or pay dividends. TCS has given up any hope for growth. It does not even try. So, it has to pay dividends.
Just like Tata Sons, all large conglomerates in India are stock price-driven, and not growth-driven.
That’s why India is witnessing:
(a) Massive wealth concentration in a few hands (b) Poor economic growth (c) High stock prices
Global technology companies do not pay any dividends to shareholders. They pay high salaries to keep employees motivated plus reinvest their profits in R&D and make capital investments for future growth.
But thanks to India’s corporate dinosaurs, the country seems to be undergoing a quiet shift from a growth economy to a stock-price-driven economy.
Unless we course-correct soon, this kind of party cannot end well.
Data Source:
All figures are taken from TCS financial statements submitted to the stock exchanges
Very nicely captured.
Working for shareholders is called ethics and not giving hikes is ….? Problem is the moment you go public, company is only worried about share price, market sentiments and these so called analysts who predict revenues. This entire model is flawed as how come analysts predict revenue unless they have insider information. Somewhere this craze to maintain margins is also sucking us. when companies are solely driven by boards and stock price manipulation, employees suffer.
Most of the upper management is holding tcs stocks, that's why they are providing huge dividends which is indirectly providing them a good hike on their salary and remaining are a bunch of fools thinking that no one got a hike this fiscal year..
This is how capitalist world works. Companies work for shareholders. Service IT companies decline started and they are struggling to increase profit sequentially like they did in the past.
Better is to invest in tcs instead of doing job here. If we invest 7lakh per year, atleast we get more dividend than salary hike. #ThodiCsalary ( TCS)
TCS employees cut salary hike + low salary + cut QVA = TCS REVENUE
Thank god i sold my shares at 4200/share
I am both an investor and an employee of TCS. As an investor, I have seen zero returns since 2021. Investors, who take on greater risk compared to employees, are understandably frustrated with this performance. Losing investor confidence is detrimental not only to the company but also to its employees.
