Less than a year ago, Tata Consultancy Services (TCS) was at the centre of a major debate over employment trends in India's IT sector.
The country's largest IT services company had reported a sharp fall in its workforce, raising concerns that artificial intelligence (AI), weaker global demand and cost-cutting measures were leading one of India's biggest private employers to reduce jobs.
Three quarters later, however, the narrative has changed significantly.
During the April-June quarter of FY27, TCS recorded a net addition of 9,279 employees, taking its total workforce to 5,93,798. This marked the company's highest quarterly net hiring in more than three years and came after months of speculation about whether India's IT hiring boom had come to an end.
So, what led to this turnaround?
WHEN DID THE DECLINE BEGIN?
The shift first became evident in the September 2025 quarter, when TCS reported a net reduction of 19,755 employees—the largest quarterly decline in the company's history.
The trend continued in the December 2025 quarter, with the workforce shrinking by another 11,151 employees.
These consecutive declines fuelled widespread speculation that TCS was carrying out large-scale layoffs as global clients reduced technology spending and AI began transforming software services.
The steep drop in headcount also sparked fears that India's IT industry was entering a prolonged phase of job losses after years of aggressive recruitment during the pandemic-driven technology boom.
WAS IT REALLY A 20,000-JOB LAYOFF?
Not entirely.
As concerns mounted, TCS clarified the reasons behind the workforce reduction.
In October 2025, Chief Human Resources Officer Sudeep Kunnumal stated that the company was not pursuing any fixed layoff target.
He explained that the decline reflected a combination of voluntary resignations, performance-related exits, business-driven workforce adjustments and employees who could not be redeployed despite investments in learning, development and reskilling.
The company maintained that all workforce decisions were based on business requirements rather than a predetermined objective of reducing headcount.
This distinction is significant because a decline in overall employee numbers does not necessarily indicate a company-wide layoff programme.
THE RECOVERY HAPPENED IN STAGES
The turnaround was gradual rather than immediate.
Following two consecutive quarters of workforce reductions, TCS reported a net addition of 2,356 employees during the January-March 2026 quarter, signalling that the phase of workforce rationalisation was beginning to stabilise.
The momentum strengthened in the April-June quarter, with another net addition of 9,279 employees.
During the same period, the company also onboarded nearly 14,000 campus recruits, indicating that fresher hiring has continued even though recruitment is now more selective than during the post-pandemic expansion.
Instead of returning to large-scale hiring, TCS appears to be selectively expanding its workforce in areas where demand is strengthening.
BUSINESS CONTINUED TO GROW
The renewed hiring becomes easier to understand when viewed alongside the company's financial performance.
For the June quarter, TCS reported a 5 per cent year-on-year increase in consolidated net profit to Rs 13,349 crore, while revenue from operations rose 14 per cent to Rs 72,275 crore.
Revenue also grew 0.4 per cent sequentially in constant currency terms, while operating margins remained broadly stable at 24 per cent.
The company maintained a healthy order book of $9.5 billion during the quarter, including an $800 million AI-led transformation deal with SKF, a strategic partnership with ServiceNow and another multi-million-dollar contract with a Europe-based Fortune Global 50 company.
According to JM Financial Institutional Securities, both revenue and margins were broadly in line with expectations. While India remained the primary growth driver, demand in North America continued to remain weak.
The brokerage also noted that management expects demand to improve during the second quarter of FY27, with most major business segments, except Retail and Consumer Packaged Goods, likely to perform better.
Importantly, TCS has reiterated its commitment to investing for future growth.
"TCS continues to focus on revenue growth and said it will not shy away from investments," JM Financial said while maintaining its "Add" rating on the stock.
These figures indicate that the company was not downsizing because of a collapse in business activity. Instead, it was recalibrating its workforce while continuing to secure major contracts and invest in future opportunities.
AI IS RESHAPING HIRING
Artificial intelligence is perhaps the biggest reason why TCS's hiring story appears contradictory.
Many expected AI to immediately replace jobs across the IT sector.
Instead, TCS has resumed hiring—but with a different approach.
The company has indicated that AI-related revenue remains relatively small and that many AI projects continue to be short-term engagements lasting only one or two quarters. At the same time, clients increasingly seek expertise in AI, cloud computing, cybersecurity and digital engineering.
As a result, recruitment is becoming more specialised.
While certain traditional roles are being phased out or restructured, demand is increasing for professionals with advanced technology skills.
This also explains how workforce reductions and new hiring can occur simultaneously.
IS TCS HIRING AGAIN?
Yes, but with a different strategy.
The latest workforce figures suggest that TCS has moved beyond the rationalisation phase that characterised the second half of 2025.
Lower attrition, continued campus recruitment, a robust order pipeline and improving demand expectations have enabled the company to expand its workforce once again.
However, this does not represent a return to the large-scale hiring witnessed after the pandemic.
Instead, the company appears focused on recruiting professionals with specialised skills while continuing to redeploy and reskill its existing employees.
THE BROADER PICTURE
Taken together, the numbers present a more balanced picture than the initial headlines suggested.
TCS did not simply reduce nearly 20,000 jobs before abruptly hiring more than 9,000 employees.
Rather, the company went through three distinct phases.
The September and December 2025 quarters were marked by workforce rationalisation driven by voluntary resignations, performance-related exits and employees who could not be redeployed.
The January-March 2026 quarter reflected stabilisation, with net hiring turning positive again.
The April-June 2026 quarter represented a stronger recovery, supported by healthy deal wins, continued campus hiring and growing demand for AI and digital capabilities.
For India's largest IT employer, the direction now appears clear.
Future hiring is unlikely to revolve around expanding headcount indiscriminately. Instead, the emphasis will be on recruiting talent with specialised skills while continuously reskilling the existing workforce to meet the demands of an AI-driven technology landscape.
