TCS headcount falls by 11,151 in Q3FY26 as restructuring continues

TCS Q3 Results

• TCS headcount fell by 11,151 in Q3FY26 amid restructuring and role realignment
• Restructuring costs fell 77% to Rs 253 crore in December quarter.
• TCS Q3 net profit dropped 14% YoY to Rs 10,657 crore due to exceptional charges.

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India’s largest IT services company, Tata Consultancy Services (TCS), saw its headcount decline by 11,151 employees on a net basis in the December quarter of FY26 (Q3FY26) as the company continued with workforce restructuring and role realignment.

TCS’ total employee base stood at 5,82,163 at the end of Q3FY26, down from 5,93,314 in the September quarter, according to the company’s quarterly factsheet released on January 12.

The sequential drop extends the workforce contraction seen in the previous quarter, showing a broader reset underway at the Mumbai-headquartered IT major as it trims roles and optimises its cost structure amid shifting demand and rapid technology changes.

The headcount reduction came in a quarter when TCS also booked large exceptional charges linked to restructuring and statutory changes under India’s new labour codes, pointing to the depth of the organisational realignment.

Nevertheless, restructuring expenses fell sharply in Q3, declining by over 77 percent to Rs 253 crore, indicating a tapering of one-time costs linked to the company’s ongoing workforce realignment.

Despite the fall in employee numbers, voluntary attrition remained elevated at 13.5 percent on a last-twelve-month basis in IT services, suggesting that the decline was driven largely by planned actions rather than a sharp spike in exits.

The latest reduction adds to a longer-term shift at TCS, which reported a fall in headcount in FY24 for the first time since its listing in 2004, marking a break from years of steady workforce expansion.

In the December quarter, TCS reported a year-on-year decline in net profit due to exceptional items, even as revenue rose sequentially. The company has also highlighted continued momentum in its artificial intelligence business, which is now running at an annualised revenue rate of $1.8 billion.

Meanwhile, TCS reported Rs 2,128 crore as an exception item weighing down on its Q3 profit due to the statutory impact of new labour codes implemented in India.

This comes as the IT major reported a 14 percent year-on-year (YoY) fall in consolidated net profit to Rs 10,657 crore for the October-December quarter of the ongoing financial year 2026.

TCS said that it assessed and disclosed the incremental impact of these labour law changes on the basis of legal opinion obtained and the best information available. "The incremental impact costing of gratuity of Rs 1,816 crore and long-term compensated absences of Rs 312 crore primarily arises due to change in wage definition," it added.