Service Agreement or Bond: Meaning, Typical Terms and What to Check Before Signing

A service agreement, called a bond by almost every candidate, is a clause in a fresher's offer letter that commits you to work for the company for a minimum period, usually one to two years, and to pay a stated amount if you leave before that. Indian IT services companies use it because they spend months training freshers before a client pays for them, and they want that cost covered if the trainee walks out early.

What a typical service agreement says

• Duration: most commonly 12 months from the joining date; some run 18 or 24 months, and some count from the end of training rather than the joining date.
• Recovery amount: a fixed sum, often described as training cost. Candidate reports for TCS freshers in 2026 place it at around ₹50,000 for a one-year agreement, pro-rated if you leave partway through. Amounts at other companies range widely, and some hire freshers with no bond at all.
• Surety or guarantor: some agreements ask for a guarantor's signature, often a parent, on stamp paper.
• Documents held: a few companies ask for original certificates as security. Ask whether this is required and get a receipt if it is.
• Interaction with notice: the notice period still applies. Leaving inside the bond period usually means serving notice and paying the recovery amount.

Why HR asks about it in the interview

"Are you aware of the service agreement, and are you willing to sign it?" is a standard HR round question in campus drives. The interviewer is checking attrition risk. A candidate who hesitates or says "I will decide later" is read as someone planning to leave for a higher-paying offer after training, which is exactly what the bond exists to discourage. Say yes if you mean it, and ask for the terms in writing.

A concrete example

A 2026 graduate receives a TCS Ninja offer. The offer letter mentions a one-year service agreement with a recovery of about ₹50,000. Eight months in, she gets a product-company offer at double the package. Her options: serve the remaining four months and leave clean; or resign now, serve notice, pay the pro-rated recovery (roughly a third of the amount), and collect her relieving letter. She chooses the second, because the new employer's background verification will ask for that relieving letter. Absconding would have saved the money and cost the letter.

What to check before signing

1. The exact duration and whether it starts at joining or after training.
2. The recovery amount and whether it is pro-rated.
3. Whether a guarantor or original documents are required.
4. What happens if the company terminates you or delays your joining. Fair agreements release you in those cases.
5. Whether the amount looks like genuine training cost or a penalty. Indian courts have generally upheld recovery of real costs and not arbitrary penalties; get advice if the number seems unrelated to any cost.

Rehearsing the conversation

The bond question rarely decides an interview on its own, but it sits next to questions about relocation, shifts and higher studies that together do. A MockMate Practice session in the browser runs an HR-style round from your resume and the job description, asks these commitment questions, and follows up if you hedge. The report shows each question, your answer and coaching. Use Practice for preparation; use MockMate's Live assistance only where the organisation, interviewer or applicable rules permit assistance and disclosure.

Related terms

• Notice period: applies on top of the bond.
• CTC vs in-hand: the other numbers in the same offer letter.
• Campus placement: where most bonded offers are made.
• TCS interview questions: how the bond comes up in a TCS HR round.