TCS headcount drops to less than 600k due to restructuring and layoffs

Tata Consultancy Services (TCS) employee headcount dropped to 593,314 in the second quarter of the financial year 2026 (Q2FY26), a decline of 19,755 employees sequentially. The tech giant had added 5,090 workers in the first quarter. In Q2FY26, the firm gave ₹1,135 crore towards severance.

 

This is the first time in many years that India’s largest IT service provider had such a steep drop in headcount and comes after it announced laying off about 12,260 employees in July.

 

It was the second major layoff in the company’s history, the previous one being in 2012, when around 2,500 employees were let go for underperformance.

 

Meanwhile, the management said that it aims to be a net job creator.

 

“We have released 1 per cent of the workforce, mostly mid and senior level, due to skills mismatch, providing them with benefits, counselling and transition support,” said Sudeep Kunnumul, chief HR officer.

 

“We have significantly localised the US workforce, with approximately 500 associates on H-1B visas.”

 

TCS rolled out increments for 80 per cent of its workforce in the second quarter.

 

“Increment, with additional quarterly variable allowances, impacted margins by 70 basis points, offset by a benefit of 40 basis points from rebalancing the pyramid and 20 basis points from operating efficiency improvements,” explained Samir Seksaria, CFO, TCS.

 

TCS’ voluntary attrition dropped to 13.3 per cent from 13.8 per cent sequentially, the first time in at least five quarters that attrition has inched down after a steady increase for all companies which became a cause of concern.

 

The steep drop in headcount drew criticism from some quarters with people saying that the difference between the layoff numbers and total drop in headcount suggested more redundancies.

 

“This is not a minor difference. Nearly 8,000 employees more than what TCS admitted have disappeared from the rolls. For a company of TCS’s scale, such underreporting cannot be dismissed as an error. It points to a deliberate attempt to downplay the scale of retrenchments and mislead regulators, policymakers, and the public. Attrition has actually fallen, which means these exits were not voluntary but management-driven,” Harpreet Singh Saluja, president of Nascent Information Technology Employees Senate (NITES), said in a statement.