TCS Looking to Weed Out 5% Under Performers After Over 23,000 Job Cuts in FY26

About a month after completing its biggest restructuring drive, Tata Consultancy Services (TCS) has reportedly asked managers to weed out underperformers in the latest appraisal cycle. According to a report by Mint, the Tata Group–owned IT giant has instructed managers to place more employees in the lowest performance category, Band D.

Citing an internal mail, the report claims that business unit heads had identified about 3% of employees around 17,500 people, as underperformers. However, the company’s human resources unit is pushing managers to assign around 5% of its 584,519 employees to Band D.

Meaning over 29,000 TCS staff might classified under the band.

The email, sent by a TCS HR executive to a business unit head in April, urged leaders to “critically review and share the list of associates” who could be slotted into Band D in order to meet the “agreed 5% distribution”, Mint claimed.

Executives cited by the newspaper said that while Band D ratings have existed earlier, this is the first time HR has formally pushed for a fixed percentage to be met across teams.

Implications of D Rating

Employees placed in Band D face severe consequences. It is claimed that in the massive layoffs TCS implemented last year was in parts based on similar ratings.

One executive told Mint that many of those laid off last year were employees who had previously received a D-band rating. Another employee said they rejected their Band D rating and are now looking for a new job before facing a salary cut or potential exit.

In July 2025, the company said it would reduce its global workforce by about 2%—roughly 12,200 roles—over the course of the financial year. By the end of the March quarter, the company’s total headcount had fallen to 584,519, a decline of 23,460 employees compared with a year earlier, reflecting a sharp contraction in its workforce through FY26.

The D-band rating also means a significant reduction in variable pay. Employees in the band are often released from their current projects and placed on a two-month performance improvement plan (PIP), TCS executives told the outlet. Failure to meet expectations during this period can result in termination.

According to the report, the move is linked to broader cost pressures in the industry. With rising adoption of AI and pricing pressure on client contracts, maintaining profitability has become a priority. Managing staff costs is one of the key levers available to business leaders.

Despite these concerns, top performers received salary hikes of about 6%, according to annual increment letters issued on Sunday.