Tata Consultancy Services (TCS) reported a net reduction of 19,755 employees in Q2 FY26, marking one of the sharpest quarterly workforce contractions in its history.
The decline comes amid a broader restructuring initiative and strategic workforce realignment.
TCS Workforce Reduction Exceeds Initial Estimates
As of September 30, 2025, TCS reported a total headcount of 5,93,314 employees, down from 6,13,069 in the previous quarter.
The company had earlier announced plans to reduce its workforce by approximately 2 percent, or around 12,000 employees, primarily targeting middle and senior management roles.
However, the actual reduction exceeded this estimate by over 7,000 employees.
Chief Human Resources Officer Sudeep Kunnumal clarified during the investor call that the reduction was a mix of voluntary and involuntary attrition.
He stated that about 6,000 employees were released as part of the restructuring, and the company is halfway through its estimated workforce optimization plan.
TCS Attrition Rate Declines Despite Layoffs
Interestingly, the quarter saw a decline in attrition rates.
TCS reported a last twelve months (LTM) attrition rate of 13.3 percent, down from 13.8 percent in Q1 FY26 and 15.3 percent in Q2 FY25.
This suggests improved employee retention even as the company undertook significant layoffs.
The company emphasized that the restructuring was not driven by performance concerns but by a need to align roles with evolving business demands.
Employees unable to find suitable roles based on their seniority were released with severance support and transition assistance.
Restructuring Costs and Financial Impact
TCS incurred ₹1,135 crore in restructuring expenses during the quarter, which impacted its net profit.
The company reported a consolidated net profit of ₹12,075 crore, slightly below analyst expectations.
Revenue rose to ₹65,799 crore, up 3.7 percent sequentially and 0.8 percent in constant currency terms.
Operating margin improved by 70 basis points to 25.2 percent, and net margin stood at 19.6 percent.
Despite the workforce reduction, TCS highlighted continued investment in employee upskilling, with 3.3 crore learning hours logged and over 26 lakh new competencies acquired.
Around 1.6 lakh employees are now proficient in AI and machine learning technologies.
Transparency Concerns Raised by Employee Union
The Nascent Information Technology Employees Senate (NITES) criticized TCS for allegedly underreporting the scale of layoffs.
NITES claimed that nearly 8,000 more employees were removed than initially disclosed and accused the company of downplaying the impact on its workforce.
The union called for greater transparency in workforce disclosures and severance practices.
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