A fresh drop in employee numbers at India’s largest IT services firm is adding to concerns that the country’s technology job market is entering another difficult phase. Tata Consultancy Services (TCS) has reported a sharp decline in headcount for the second consecutive quarter, pointing to broader structural changes across the sector.
At the end of Q3 FY26, TCS said its total workforce stood at 582,163, down by 11,151 employees from 593,314 at the end of the September quarter. This followed an even steeper reduction in Q2 FY26, when the company cut 19,755 jobs, taking headcount down from 613,069 in Q1 FY26.
Industry experts say the decline reflects a mix of weak global demand and long-term shifts in how IT firms operate. Sarthak Sharma, founder of ModxComputers, said the reduction is driven by both temporary and permanent factors. “Tata Consultancy Services’ employee reduction is an example of headcount reduction due to a combination of factors, both temporary and permanent,” he said.
Sharma explained that over the past 12 to 18 months, companies in the US and Europe have cut technology spending due to high interest rates and geopolitical tensions. These regions account for nearly 70% of India’s IT revenue. He added that spending on large digital transformation projects and system upgrades has fallen by 15% to 20% in sectors such as banking, finance, and retail.
At the same time, attrition in Indian IT firms has dropped sharply, from 20% to 22% in FY22 to about 11% to 13% in FY25. “This has created a situation where the demand for replacement hires is very low, resulting in a natural contraction of net employee additions,” Sharma said.
He noted that companies are now taking a structural approach to workforce reduction, supported by automation and new technologies. “Workforce reductions based on the auto solutions implemented are far more constructive,” he said. Entry-level hiring has fallen by nearly 30% to 40%, with the impact felt most at junior and mid-level roles linked to traditional technologies.
Ajit Rai, Vice President of Human Resources at Stellar Innovations, said TCS’s cuts reflect a wider industry trend. “This has happened amidst restructuring for skill realignment and weak global demand from US clients uncertain about tariffs,” he said. Rai added that Infosys and Wipro have seen more than 42,000 professionals exit over the past 2 years.
Both experts agree the sector is undergoing long-term transformation. Demand remains strong for skills in cloud computing, cybersecurity, data engineering, AI governance, and cloud architecture, while bulk hiring has clearly faded.
In contrast, Infosys added 5,043 employees in Q3 FY26 and plans to onboard about 20,000 employees in FY26, according to its Chief Financial Officer Jayesh Sanghrajka.
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