TCS Reduces Over 11,000 Staff in Q3 as Restructuring Continues; Fresher Intake Doubles

Tata Consultancy Services (TCS), India’s largest IT services firm, reported a net reduction of 11,151 employees in the December quarter of FY26 as it continued to cut its workforce through role rationalisation and organisational changes.

The company’s total headcount declined to 5,82,163 at the end of Q3FY26, compared with 5,93,314 in the preceding September quarter, according to its quarterly factsheet released on January 12.

The fall comes on the back of a broader “restructuring exercise” the company announced in July to make itself “future-ready”. In the September quarter, the company reduced its workforce by 19,755 employees on a net basis.

Earlier, the company had said it would be reducing its workforce by about 2%, or roughly 12,000 employees.

Following the announcement, which came along with the Mumbai-based firm’s December quarter results, IT workers’ body Nascent Information Technology Employees Senate (NITES) slammed the company. Its president, Harpreet Singh Saluja, claimed that the quarterly disclosures have “once again exposed a serious disconnect between the company’s public narrative and the reality faced by employees”.

“This sharp reduction, coupled with an attrition rate of around 13.5%, clearly establishes that the company is undergoing large-scale workforce rationalisation and not merely routine attrition, as it seeks to portray,” he said.

He added that a substantial number of employees, particularly those with 10 to 20 years of service, have been pushed out through forced resignations, prolonged benching, role withdrawals, manipulated performance assessments, and indirect pressure to resign.

“These exits are strategically categorised as ‘voluntary attrition’ to avoid statutory obligations such as retrenchment compensation, notice pay, and due process mandated under labour laws,” he claimed.

Fresher Intake Doubles

Meanwhile, the company’s Chief HR Officer, Sudeep Kunnumal, noted that TCS is doubling the intake of fresh graduates “with higher-order skills, rapidly expanding our next-generation talent pool”.

“As of this quarter, there are over 217,000 associates with advanced AI skills, directly powering client success at scale. We doubled our intake of fresh graduates with higher-order skills, rapidly expanding our next-generation talent pool. The passion and commitment our associates show in mastering next-gen capabilities give us the confidence to innovate responsibly and deliver sustainable value as AI reshapes the services landscape,” he said.

On the financial front, Tata Consultancy Services reported a sharp decline in profitability in the December quarter, with consolidated net profit falling 13.8% year-on-year to ₹10,720 crore from ₹12,444 crore. Profit also slipped sequentially from ₹12,131 crore in the September quarter, largely due to exceptional items.

The company cited statutory costs linked to the implementation of India’s new labour codes as a key drag on earnings. TCS booked exceptional charges of ₹2,128 crore during the quarter, including ₹1,816 crore towards incremental gratuity costs and ₹312 crore for long-term compensated absences, primarily arising from changes in wage definitions under the revised laws.

Its Noida-based rival HCLTech also reported a similar impact.

Revenue, however, rose 2% quarter-on-quarter to ₹67,087 crore. Despite the profit pressure, TCS highlighted continued momentum in its artificial intelligence business. Annualised AI services revenue climbed 17.43% sequentially to $1.8 billion, driven by higher enterprise spending on automation, data platforms and generative AI. Total contract value for the quarter stood at $9.3 billion.

Chief Executive Officer and Managing Director K Krithivasan said the company remains focused on becoming the world’s largest AI-led technology services firm, noting that investments across the AI stack are beginning to translate into growth. Chief Financial Officer Samir Seksaria added that executing TCS’s five-pillar AI strategy at scale remains central to its long-term transformation.