TCS Cuts 11,151 Jobs in Q3 FY26 as Employee Count Continues to Shrink

The largest software services exporter in India, Tata Consultancy Services (TCS), announced a substantial drop in its staff base in the December quarter. This is the second consecutive quarter of workforce contraction as the company continues to realign its manpower in response to cost constraints and technological advancements.

According to TCS's quarterly reports, the company's overall workforce at the end of Q3 FY26 was 582,163, down 11,151 from 593,314 at the end of the September quarter. The decrease comes after a more severe cut of 19,755 workers in Q2 FY26, when the workforce dropped from 613,069 in Q1 FY26 to 593,314. The company's previously declared plan to eliminate almost 12,200 positions is exceeded by the cumulative drop over the last two quarters, suggesting that the contraction is a result of both planned layoffs and general attrition.

Reasons for the Decline in the Workforce

The reduction comes after TCS announced in July that it will cut roughly 12,200 workers, or 2% of its global workforce, mostly at middle and senior levels. The move, according to the corporation at the time, was intended to make the organisation more future-ready as delivery models and technologies change. According to business data, voluntary attrition in IT services was 13.5% over the previous 12 months as of Q3 FY26.

Even though attrition is still high, it has levelled off in comparison to the sector's post-pandemic peak. The most recent decrease is in contrast to the increase in the workforce that occurred earlier in the fiscal year. With 13,090 new hires in Q1 FY26, TCS's headcount reached 613,069, the highest number throughout the reviewed period. Changes in headcount over the previous fiscal year were quite small. TCS had 607,354 workers at the end of Q3 FY25, increased slightly to 607,979 in Q4 FY25, and then increased once more in the first quarter of FY26. A more significant change in workforce strategy is shown by the stark reversals in the September and December quarters.

Infusion of AI and Reframing Employee Costs: Formula to Increase Profits

TCS's chief human resources officer, Sudeep Kunnumal, stated that the company's shift to an AI-first operating model continues to be a key factor in its hiring decisions. According to Kunnumal, the core of TCS's transition to an AI-first company is its employees. More than 217,000 workers now possess sophisticated AI skills, he continued, directly supporting large-scale client engagements. Despite a decrease in overall workforce, the corporation reported that it has doubled its intake of recent graduates with higher-order abilities and is still investing in next-generation talent.

Due to staff cutbacks, employee costs under cost of revenue accounted for 44.9% of revenue in Q3 FY26, down from 46.9% in the prior quarter. Though selling, general, and administrative expenses increased somewhat, the overall cost of revenue decreased to 59.2% of revenue from 60.4% in Q2 FY26. According to the most recent data, TCS is one of several major IT services companies that are readjusting their staff as automation changes delivery patterns and client spending stays selective.

The sharp exits in Q2 and Q3 indicate a more conservative approach to total workforce growth, even while management continues to emphasise investment in AI skills and new people. Demand visibility in the upcoming quarters, and the rate at which AI-led transformation generates new income streams will determine how swiftly resumes are hired.