Tata Consultancy Services (TCS), India’s largest IT services firm, has announced plans to reduce its workforce by approximately 12,000 employees during fiscal year 2026 (FY26). This reduction represents about 2% of TCS’s total global workforce, which stood at 603,338 employees as of December 31, 2023. This step shows that TCS is changing its approach to become more efficient and to keep up with new technologies as business needs continue to change.

This restructuring follows a recent trend within the company. In Q3 FY24, TCS reported its first net headcount reduction in 10 quarters, with 5,680 employees exiting the organization. The latest cuts are part of a broader “workforce optimization” initiative aimed at improving productivity through increased automation, artificial intelligence (AI) integration, and targeted upskilling programs.

Concurrently, TCS will recalibrate its hiring strategy. The company plans to scale back fresher recruitment while prioritizing experienced professionals with expertise in AI and other high-demand digital skills. This pivot aligns with efforts to realign its talent pool with future client needs, particularly in AI-driven solutions.

The decision unfolds against a backdrop of industry volatility. TCS’s current IT services attrition rate stands at 13.3% (last 12 months), reflecting broader sector dynamics. The FY26 restructuring will be implemented in phases, with impacted employees receiving transition support. While challenging for affected staff, TCS positions this optimization as essential for long-term competitiveness.

As automation and AI redefine service delivery models, TCS’s workforce strategy underscores a critical transition for India’s IT sector balancing technological advancement with human capital stewardship. The company’s focus remains on sustaining market leadership while navigating the complexities of digital transformation.