Shares of Tata Consultancy Services (TCS) dropped sharply in early trading on Monday, slipping nearly 2% following the company’s announcement to reduce its global workforce by approximately 12,000 employees in FY2025-26. The stock fell as much as 1.69% to ₹3,081.20 apiece on the BSE, making it one of the top losers in the Nifty IT index, which also declined over 1.6% amid broader weakness in IT stocks.
The workforce reduction, accounting for nearly 2% of TCS’s headcount, is part of a larger effort by the IT giant to transition into a more “future-ready organisation” amid rapid technological changes and increased focus on artificial intelligence (AI) and digital transformation.
As per the announcement, 12,261 roles are expected to be eliminated in FY26, primarily affecting employees in middle and senior management positions. TCS’s total employee count stood at 6,13,069 as of June 30, 2025, reflecting a net addition of 5,000 employees during Q1.
TCS recently revised its internal bench policy, requiring employees to clock at least 225 billable days annually and limiting time on the bench to no more than 35 days, increasing pressure on underutilized staff.
Speaking to Moneycontrol, TCS CEO & MD K Krithivasan emphasized that the layoffs were not directly triggered by AI adoption or productivity gains, but were instead due to skill mismatches and challenges in employee deployment.
“We are not reducing headcount because of AI replacing roles. It’s more about feasibility of deployment and alignment with future skills,” Krithivasan stated.
TCS’s attrition rate rose to 13.8% on a last-twelve-month (LTM) basis as of June 2025, up from 13.3% in the previous quarter. The company’s CFO acknowledged that attrition was becoming a growing concern, especially at the top-talent level, and underlined the difficulty in replacing senior talent with fresh hires.
TCS posted a net profit of ₹12,760 crore in Q1 FY26, up 4.38% QoQ from ₹12,224 crore in Q4 FY25. However, revenue from operations declined by 1.6% to ₹63,437 crore, compared to ₹64,479 crore in the previous quarter. Revenue in dollar terms also saw a dip of 0.6% to $7,421 million.
EBIT declined marginally by 0.6% QoQ to ₹15,514 crore
EBIT margin improved to 24.5%, up 30 bps from the previous quarter
The board announced an interim dividend of ₹11 per share
TCS stock has underperformed significantly against benchmark indices:
Down 10% in the last month
Down 23% over the past six months
Down 30% on a 1-year basis
Only 33% return over the past five years
Other IT heavyweights such as Infosys and Wipro also declined over 1% each, dragging the overall sector sentiment lower.
At 9:40 AM, TCS shares were trading 1.25% lower at ₹3,095.25 on the BSE.
The layoff announcement from TCS follows similar cost-rationalization strategies seen across the global tech sector, including Intel, which recently cut 15% of its workforce, and other Indian firms reevaluating their talent deployment strategies amid increasing AI integration and slower global tech spending.
