TCS Headcount Dips Sharply: Why India’s IT Sector Is Facing a Job Crisis

India’s largest IT services company, Tata Consultancy Services, has reported a sharp decline in employee strength for the second consecutive quarter, intensifying concerns over a growing job crisis in the country’s information technology sector.

At the end of Q3 FY26, TCS said its total headcount stood at 582,163, down by 11,151 employees from 593,314 at the end of the September quarter. This followed an even steeper workforce reduction in Q2 FY26, when the company trimmed 19,755 employees.

In just two quarters, TCS has reduced its workforce by more than 30,000 employees, a rare contraction for a company that has historically been a major job creator in India.

Why Is TCS Cutting Jobs?

Industry experts say the decline reflects a combination of global economic pressures, lower attrition, and structural changes in how IT services are delivered.

Global clients, particularly in the US and Europe, have significantly curtailed technology spending over the past year due to high interest rates, geopolitical uncertainty and cautious corporate budgeting. These regions contribute nearly 70% of India’s IT revenue, making Indian firms highly sensitive to overseas demand cycles.

Spending on large digital transformation projects, legacy modernisation and discretionary IT initiatives has fallen sharply across sectors such as banking, financial services and retail, directly impacting hiring needs.

Lower Attrition Is Also Shrinking Net Hiring

One of the less visible but critical reasons behind falling headcount is declining attrition.

Attrition levels across Indian IT firms have dropped from 20–22% in FY22 to around 11–13% in FY25. While this may appear positive on the surface, it has reduced the need for replacement hiring.

With fewer employees voluntarily exiting, companies are adding far fewer new roles, leading to a natural contraction in net employee additions.

From Cyclical Cuts to Structural Workforce Reduction

Experts warn that the current slowdown is no longer just cyclical.

IT companies are increasingly adopting structural workforce reductions, driven by automation, artificial intelligence and new delivery models. Tasks that once required large teams are now being handled by smaller, highly skilled groups supported by AI-driven tools.

Automation has delivered efficiency gains of 20–30% in areas such as testing, application maintenance, support services and documentation. As a result, even when deal pipelines improve, companies are reluctant to expand headcount aggressively.

Entry-Level and Mid-Level Jobs Under Maximum Pressure

The brunt of these changes is being borne by entry-level and mid-level professionals.

Hiring at the junior level has reportedly dropped by 30–40%, while mid-level engineers working on traditional technologies and support roles face increasing uncertainty.

In contrast, demand remains relatively resilient for specialised roles such as:

• Cloud architecture

• Cybersecurity

• Data engineering

• AI governance

• Domain consulting

Senior professionals directly linked to client delivery and revenue generation have largely been shielded from cuts.

AI Is Reshaping Team Structures Permanently

Artificial intelligence is no longer a future disruptor — it is already changing how IT firms operate.

Large project teams are being replaced by leaner units, as AI tools reduce manual effort and improve turnaround times. Companies are also under pressure to protect margins, with many Tier-1 firms targeting EBIT margins of 24–26%, making cost control a top priority.

Industry-Wide Stress Signals

The trend is not limited to TCS alone. Several large IT firms have seen significant workforce churn over the past two years, reflecting broader industry stress.

While Infosys has taken a relatively different approach by adding employees in recent quarters, even it has emphasised selective hiring and skill-based onboarding rather than large-scale recruitment.

A Long-Term Shift, Not a Temporary Phase

Industry observers agree that India’s IT sector is undergoing a long-term transformation, not a short-lived slowdown.

Companies are moving away from volume-based hiring toward quality-driven talent acquisition, with future recruitment closely tied to niche skills and specific client requirements.

For young professionals and graduates, traditional coding skills alone are no longer sufficient. Career resilience increasingly depends on expertise in AI, cloud-native platforms, cybersecurity, data analytics and product-led development.

What This Means for India’s IT Workforce

The sharp drop in TCS headcount serves as a warning sign that the IT sector’s golden era of mass hiring may be over.

As automation accelerates and global demand remains uneven, job growth in IT is likely to remain muted, selective and skill-intensive — marking a fundamental shift in India’s employment landscape.