Shares of information technology bellwether, Tata Consultancy Services fell 2% on July 28, following its announcement to trim 2% of its global workforce over FY26. The planned reduction, primarily targeted at mid- to senior-level employees, has drawn cautious responses from brokerage houses, which flagged execution risks and ongoing sluggishness in key markets.
TCS CEO K Krithivasan, in an interview with Moneycontrol, clarified that the decision was not linked to automation or AI-driven redundancy, but rather to a mismatch between available talent and market needs.
“It is not because that we need less people. We will continue to look for high (quality) talent, acquiring talent, training talent. That continues to happen. This is more about where there is a feasibility of deployment,” he said.
Global brokerage Citi highlighted continued weakness in core markets as seen in TCS’ Q1 earnings, and hence, flagged the need to closely monitor margin and cash flow trends. Striking a balanced tone, Citi also retained its “sell” rating on the stock, with a target price of ₹3,135, marginally below the current market price.
However, Jefferies struck a more cautious note. While not altering its stance on the stock, the brokerage warned that the 2% headcount cut could lead to near-term execution slippages and potentially higher attrition in the long term. It cited a broader trend of cost optimisation and AI-led productivity shaping deal wins across the sector. Jefferies further added that firms unable to keep pace may resort to further layoffs.
On the sectoral front, Jefferies remains selective and prefers Infosys, HCLTech, Coforge and Mphasis among large- and mid-cap IT firms.
TCS’ move comes against the backdrop of a broader drawdown in the Indian IT sector, which went on a hiring spree during the pandemic years. Since then, employee counts have gradually declined across major players. While TCS’ net headcount dipped by 2,249 in recent quarters, Infosys and Wipro have witnessed more substantial reductions of over 12,000 and 25,000 respectively.
