Key Points
- TCS completed workforce restructuring with 8,000 job cuts, 25 per cent below initial 12,000 target
- Company spent ₹1,388 crore on restructuring exercise completed in Q3 FY26
- IT industry utilisation levels now at 80-88 per cent, up from earlier 60-70 per cent range
Tata Consultancy Services cut 8,000 jobs in its workforce restructuring exercise, about 25 per cent fewer than the 12,000 reductions the company had initially planned. The IT services major completed the exercise in the third quarter of FY26 after announcing the reorganisation in July 2025.
The reduction affected primarily middle and senior-level employees across TCS’ global operations. The company spent ₹1,388 crore on restructuring expenses during FY26, according to its financial disclosures.
TCS had announced in July 2025 that it would reorganise to become what it called a future-ready organisation. At that time, the company employed slightly over 6 lakh people worldwide.
The company laid off 6,000 employees during Q2 FY25 as part of the exercise. The remaining reductions took place in Q3. TCS management stated that the exercise involved finding ways to train existing employees in new-age technology. Only those employees whom the company could not redeploy in the reorganised structure were let go.
The term ‘fungible’ in corporate parlance refers to employees who can be moved across different projects and roles based on their skills. TCS indicated that workers who lacked this flexibility faced redundancy.
Shift in hiring strategy
TCS is changing its hiring approach alongside the restructuring. The company is moving from a bench-led strategy, where it hires employees in anticipation of future projects, to a demand visibility-led model. Under this new approach, the company hires only when it has confirmed client requirements.
This shift will also affect campus recruitment. TCS onboarded 44,000 freshers in FY26 and currently has demand visibility for 25,000 hires going forward.
Neeti Sharma, CEO, TeamLease Digital, a staffing services firm, explained the broader industry trend. She said most IT services companies have maintained very thin benches for the past two years.
“Given the increased focus on revenue generation through AI, many services companies are now hiring workforce that comes with related skills in areas of AI/ML coding, data, cloud or security,” Sharma said.
IT companies have increased their utilisation levels as delivery models shift from headcount-based billing to productivity and outcome-based approaches. Utilisation refers to the percentage of billable hours an employee works compared to total available hours; higher utilisation means more employees are actively working on revenue-generating projects.
TCS does not publicly disclose its utilisation figures. However, its peers have reported utilisation rates in the 80 to 88 per cent range. Industry observers believe TCS likely operates in the same band, a significant increase from the 60 to 70 per cent range that companies once considered optimal.
Traditional IT roles such as L1 support, which handles basic customer queries and technical issues, and manual testing are declining, Sharma added. Roles in artificial intelligence, data analytics and cloud computing are growing. Fresh graduates with AI skills now command salaries between ₹6 lakh and ₹12 lakh annually, a premium of 25 to 30 per cent compared to other entry-level hires.
Headcount rises despite elevated attrition
TCS added 2,356 employees during the January to March quarter. Total headcount stood at 5,84,519 at the end of March, up from 5,82,163 in the December quarter.
This increase came even as the company’s attrition rate, which measures the percentage of employees leaving the organisation, remained elevated. Attrition stood at 13.7 per cent, rising by 20 basis points on a month-on-month basis. One basis point equals one-hundredth of a percentage point.
TCS management acknowledged that current attrition levels exceed the company’s comfort range of 10 to 12 per cent. They attributed the higher figure to current industry dynamics without providing further details.
People familiar with the matter said hiring during the quarter included backfilling roles vacated through voluntary attrition. The company also onboarded trainees during this period, and trainee intake accounted for most hires in the quarter.
TCS will continue its demand-led hiring approach as it navigates changing market conditions. The company’s campus recruitment plans for the coming year will depend on confirmed project requirements rather than anticipated growth.
Your Questions, Answered
How many employees did TCS lay off in its restructuring exercise?
TCS laid off approximately 8,000 employees as part of its workforce restructuring, about 25 per cent fewer than the 12,000 reductions initially planned. The exercise primarily affected middle and senior-level staff.
How much did TCS spend on its workforce restructuring?
TCS incurred restructuring expenses of ₹1,388 crore during FY26. The company completed the exercise in the third quarter of the financial year.
What is TCS' new hiring strategy after restructuring?
TCS is shifting from a bench-led hiring model to a demand visibility-led approach. The company will now hire based on confirmed client requirements rather than anticipated future projects.
What is the current attrition rate at TCS?
TCS reported an attrition rate of 13.7 per cent, which is above the company's comfort range of 10 to 12 per cent. Management attributed the elevated figure to current industry dynamics.
