Tata Consultancy Services (TCS) has reported a sharp decline in employee strength for the second consecutive quarter, reigniting concerns that India’s IT job market may once again be under pressure.
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 close of the September quarter. This follows an even steeper contraction in Q2 FY26, when the company reduced its headcount by 19,755 employees. Over just two quarters, TCS’s workforce has shrunk by more than 30,000, raising questions about the depth and duration of the slowdown in India’s IT sector.
Industry experts attribute the decline to a combination of global economic headwinds and structural shifts within the IT services industry.
Sarthak Sharma, founder of ModxComputers, said the reduction reflects both temporary and long-term changes. Over the past 12–18 months, companies in key markets such as the US and Europe—together accounting for nearly 70% of India’s IT revenue—have curtailed technology spending amid high interest rates and geopolitical uncertainty.
He noted that investments in large digital transformation programmes, legacy system upgrades and new technology initiatives have fallen by 15–20% across sectors like banking, financial services and retail.
At the same time, employee attrition in Indian IT firms has dropped sharply, from 20–22% in FY22 to around 11–13% in FY25. “With fewer employees leaving voluntarily, the need for replacement hiring has fallen significantly, leading to a natural contraction in net additions,” Sharma said.
According to Sharma, companies are increasingly viewing workforce reduction as a structural change rather than a temporary adjustment. Firms are leveraging automation, AI and vertical-specific solutions to improve efficiency and eliminate roles that are no longer essential.
He added that such technology-led reductions are more permanent in nature, with several industries already nearing the limit of how much headcount they can cut without impacting operations.
The impact has been most severe at the lower and middle levels of the workforce. Sharma said entry-level hiring in IT services firms has fallen by nearly 30–40%, with junior and mid-level engineers, particularly those working on traditional technologies, facing the greatest pressure.
However, demand remains strong for specialised skills. Roles in cloud computing, cybersecurity, data engineering, AI governance and cloud architecture continue to see hiring interest, while senior positions linked directly to client delivery and revenue have largely been protected.
Automation and artificial intelligence are also changing how IT companies staff projects. Sharma said AI-driven tools are delivering efficiency gains of 20–30% in areas such as testing, application maintenance and documentation, reducing the need for large project teams even when deal pipelines improve.
Margin protection has further tightened hiring. Many top-tier IT firms are operating with EBIT margin targets of 24–26%, making strict cost control a priority.
Ajit Rai, Vice President of Human Resources at Stellar Innovations, said TCS’s numbers reflect a broader industry trend. He noted that the company’s headcount has fallen below 600,000 following reductions of nearly 20,000 employees in Q2 FY26 and another 11,151 in Q3.
Rai said the slowdown has been compounded by skill realignment efforts and weak demand from US clients amid tariff-related uncertainty. Across the sector, companies such as Infosys and Wipro have seen more than 42,000 professionals exit over the past two years.
While global factors matter, Rai stressed that automation and AI are placing the most sustained pressure on jobs, particularly mid-level engineering and support roles. He added that although fresher hiring may appear strong on paper, many young employees struggle if they are not redeployed into relevant, in-demand roles.
Both experts agree that the IT industry is undergoing a long-term transformation rather than a short-lived slowdown. Bulk hiring has given way to a focus on high-quality, specialised talent.
“For long-term career stability, basic coding skills are no longer enough,” Sharma said, urging professionals to upskill in AI, cloud-native technologies, cybersecurity, data analytics and domain consulting.
Rai echoed the view, highlighting the growing importance of skills in AI, machine learning, cloud computing, prompt engineering and product-focused roles as traditional services face continued disruption.
While TCS has sharply reduced headcount, Infosys has taken a different approach. The Bengaluru-based IT major added 5,043 employees in Q3 FY26, marking its sixth consecutive quarter of workforce growth.
Infosys has hired around 18,000 freshers so far and remains on track to onboard 20,000 employees in FY26, according to Chief Financial Officer Jayesh Sanghrajka.
