India’s largest IT services company, Tata Consultancy Services (TCS), reported a significant drop in employee headcount during fiscal year 2026. The company’s total workforce declined by nearly 23,460 employees compared to the previous year, ending the fourth quarter with 584,519 employees. However, TCS clarified that the decline cannot be attributed entirely to last year’s restructuring exercise. According to the company, multiple business and workforce factors played a role in the reduction.

TCS Says Fresh Hiring Remains on Track

Even with the decline in employee numbers, TCS said it continues to focus strongly on fresher hiring and campus recruitment. The company revealed that it has already made around 25,000 campus offers and remains on track to hire nearly 40,000 freshers annually. TCS added that it onboarded more than 10,000 people in the previous year and will continue hiring talent from leading universities and institutions. Later in the fiscal cycle, the company also added 2,356 employees, showing that hiring activity remains active.

No Major Layoffs, Only Small Reduction Through Bench Policies

TCS denied that it had conducted any large-scale layoffs. The company stated that only around 2% of its workforce reduction last year came through tightening bench policies and voluntary exits, primarily among mid-to-senior level employees. TCS emphasized that the restructuring exercise was completed earlier and should not be seen as the sole reason behind the headcount decline.

TCS Rejects Claims That Indian IT Industry Will Be Dead by 2030

TCS CEO K. Krithivasan strongly responded to recent comments suggesting that the Indian IT services industry could become irrelevant by 2030. He said such claims are incorrect and that companies like TCS are well positioned to benefit from the rapid rise of artificial intelligence. According to him, businesses around the world still need experienced IT service providers to help them adopt AI technologies, transform legacy systems, and modernize operations.

AI Creates Huge Opportunity for Traditional IT Services Companies

TCS Chief Operating Officer Aarthi Subramanian said there is a widening gap between AI technology innovation and enterprise adoption. Many businesses are struggling to keep pace with the fast-changing AI landscape. She explained that this creates a major opportunity for companies like TCS, which can help enterprises implement AI solutions, integrate new systems, and drive digital transformation. The company believes AI will become one of the strongest growth drivers for the IT services sector in the coming years.

Growth Returning, Order Book Becoming Stronger

While acknowledging the workforce decline, TCS leadership said the company’s overall business momentum remains strong. CEO Krithivasan said that while the decline is a matter of concern, business growth has returned. He highlighted that TCS has now delivered two consecutive quarters of growth and expects stronger performance in the coming quarters. He also said the company’s international revenue momentum has improved and the order book for large deals remains healthy.

TCS to Return to Standard Salary Increment Cycle

TCS announced that it plans to return to its regular salary increment cycle, signaling confidence in demand conditions. With a strong deal pipeline, newly signed mega deals, and four new clients crossing the $100 million annual revenue threshold, the company said it aims to exceed its previous constant currency growth rate of 4.6% in FY2027. The company sees this as a positive sign of stronger demand and improving business conditions.

TCS Q4 Performance Mixed but Profits Rise Strongly

TCS described its fourth-quarter performance as mixed. The company posted a 12% rise in net profit to ₹13,718 crore in the March quarter, while revenue increased 9.6% to ₹70,698 crore. Sequentially, profit was up 19.4% and revenue rose 5.4%. These results exceeded or matched market expectations after several weaker quarters. However, TCS also reported its first annual revenue decline since going public, with constant currency revenue falling by 2.4% in FY2026.

Highest Margins in Four Years

Despite revenue challenges, TCS reported the highest net margin in the last four years. The company said AI-led efficiencies, cost discipline, and improved execution helped margins expand. Management also noted that uncertainties in West Asia and global macroeconomic pressures could continue to affect business sentiment in the future.

AI Services Revenue Growing Rapidly

TCS said fourth-quarter AI services revenue rose sharply to $2.3 billion, compared to $1.8 billion in the December quarter and $1.5 billion in the September quarter. This was the first time the company separately reported AI services revenue, showing the increasing importance of artificial intelligence in its business model.

OpenAI and AMD Deals Strengthen AI Push

During the fourth quarter, TCS signed important contracts with OpenAI and AMD to build AI-powered data centers and next-generation chip infrastructure. These deals highlight TCS’s growing role in the global AI ecosystem. The company also said its operating margin increased to 25% in FY2026, the highest level in four years, supported by better productivity and strong execution.