TCS & HCLTech Shrink Workforce Amid AI Push

Tata Consultancy Services (TCS) and HCLTech's reported a decline in its employee base in the December quarter, amid technology shifts and cost pressures.

HCLTech's headcount was approximately 226,379 as of Q3 FY26 (ending December 2025), showing a slight decrease of 261 employees from the previous quarter despite hiring fresh graduates, with attrition at 12.4 per cent. The company is managing headcount through workforce rationalization, focusing on AI and digital skills, and reducing reliance on traditional roles while adding new talent in specialized areas.

At the end of Q3 FY26, TCS's total headcount stood at 582,163, down 11,151 employees from 593,314 at the end of the September quarter, the company said in its quarterly filing.

Both the companies quarterly revenue grew stronger on the back of advanced AI services.

K Krithivasan, CEO and MD, said "The growth momentum we witnessed in Q2FY26 continued in Q3FY26. We remain steadfast in our ambition to become the world's largest AI-led technology services company, guided by a comprehensive five-pillar strategy. Our AI services now generate $1.8 billion in annualized revenue, reflecting the significant value we provide to clients through targeted investments across the entire AI stack, from Infrastructure to Intelligence."

TCS is executing its five-pillar AI strategy at speed and maintains that scale is central to its transformation into an AI-first enterprise. The workforce contraction follows TCS's announcement in July of plans to reduce around two per cent of its global workforce across middle and senior levels. The company said at the time that the move was aimed at making the organisation more future-ready as technologies and delivery models evolve.

"We continued to see AI acceleration this quarter. We helped customers identify valuable AI opportunities and deployed solutions faster with Rapid Builds. Our customers continue to invest in Cloud, Data, Cyber and Enterprise Transformations to build readiness for AI" said Aarthi Subramanian, Chief Operating Officer, TCS.

The Tata company reported mixed financial performance as the company posted a 13.9 per cent year-on-year (YoY) decline in net profit for the December quarter. Revenue from operations rose 4.9 per cent YoY to INR 67,087 crore supported by steady client demand.

For HCLTech, Q3 FY26 consolidated net profit declined 11 percent YoY to INR 4,076 crore. Consolidated revenue increased 13.3 percent from a year earlier to INR 33,872 crore in the quarter ending December 31.

"Another standout quarter on all fronts with revenue up 4.2 per cent QoQ in constant currency along with a strong recovery of operating margin to 18.6 per cent. The strong revenue momentum in the quarter has enabled us to cross $15 billion in annualized revenues. Our new bookings were exceptionally high at $3 billion. Our services revenue grew 1.8 percent QoQ in constant currency, driven by 19.9 per cent QoQ growth in Advanced AI services. HCL Software revenue grew sharply driven by seasonality and data Intelligence portfolio. We are well positioned to address evolving AI demand of our clients across industries and service lines" said C Vijayakumar, CEO & MD, HCLTech.

"AI continues to be a key growth driver across our portfolio, and we are sharpening our capabilities to leverage these emerging opportunities" said Roshni Nadar Malhotra, chairperson, HCLTech.

According to EmkayGlobal, HCL Tech posted better-than-expected operating performance in Q3. HCLT generated over $146 million in advanced AI revenue, driven by Agentic AI, Physical AI and AI Factory implementations.

"TCS's Q3 operating performance was in line with our expectations. AI services revenue for Q3 stood at ~$450 million. The improving demand environment in Q2FY26 extended into Q3, marked by a steady rise in RoI-driven, short-cycle AI projects across industries. This, coupled with advancing client conversations a healthy order book, and leadership in AI, is expected to drive an uptick in revenue growth with the management aspiring to achieve better revenue growth in international markets in FY26 vs FY25" said Dipeshkumar Mehta, senior research analyst at Emkay Global Financial Services Ltd.