TCS Q3 Attrition Rate Rises to 13.5%, Headcount Falls by Over 11,000 Employees

Tata Consultancy Services announced its Q3 FY26 results, revealing a marginal increase in attrition rate alongside a significant reduction in workforce as part of its ongoing restructuring initiative. India's largest IT services company reported mixed employment metrics during the December quarter.

Quarterly Employment Metrics

The company's key employment indicators for Q3 FY26 showed notable changes compared to the previous quarter:

Metric:	Q3 FY26	Q2 FY26	Change
Total Headcount:	5,82,163	5,93,314	-11,151
Attrition Rate (LTM):	13.5%	13.3%	+0.2%
Year-over-Year Attrition:	13.5%	13.0%	+0.5%

Workforce Restructuring Impact

Since the first quarter of FY26, TCS has reduced its employee headcount by 30,906 following the restructuring announcement made in July 2025. The company had disclosed plans to slash its workforce by 2% in FY26, primarily targeting middle and senior management positions.

As part of this transition, approximately 12,200 roles were identified for removal during the workforce restructuring process. TCS emphasized that the transition was being planned with careful consideration to ensure no impact on service delivery to clients.

AI-Focused Transformation Strategy

The workforce changes align with TCS's strategic shift toward becoming an AI-first enterprise. Chief HR Officer Sudeep Kunnumal highlighted the company's progress in building AI capabilities across its workforce:

Over 217,000 associates now possess advanced AI skills
Doubled intake of fresh graduates with higher-order skills
Focus on rapidly expanding next-generation talent pool
Strategic retraining and redeployment of existing staff

Reporting Approach

In an unusual move during the previous quarter, TCS did not mention its quarterly attrition rate and total headcount figures in its official earnings announcement to stock exchanges. The management later revealed these employment figures during the post-earnings press conference, marking a departure from standard reporting practices.

The company's workforce transformation reflects broader industry trends toward AI integration and operational efficiency, with TCS positioning itself to leverage advanced technologies while managing costs through strategic workforce optimization.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
+0.99%	-0.34%	+0.98%	-4.26%	-19.79%	+1.99%

Tata Consultancy Services announced a dividend of ₹57.00 per share on Monday, including a special dividend of ₹46.00, reflecting the company's strong cash generation capabilities despite measured growth in the global technology spending environment. The record date has been fixed as January 17, with the dividend payout scheduled for February 3.

Financial Performance Overview

The country's largest IT services exporter reported mixed financial results for the December quarter. Revenue stood at ₹67,087.00 crore, representing a 5% increase from ₹63,973.00 crore in the same quarter last year. On a sequential basis, revenue grew 2% quarter-on-quarter with constant currency growth of 0.8%.

Financial Metric:	December Quarter	Previous Year	Change (%)
Revenue:	₹67,087.00 cr	₹63,973.00 cr	+5%
Net Profit:	₹10,657.00 cr	₹12,380.00 cr	-14%
Net Income:	₹13,438.00 cr	-	+8.5% YoY
Net Margin:	20.00%	-	+40 bps sequentially
Operating Margin:	25.20%	-	Stable QoQ

Net profit attributable to shareholders declined 14% to ₹10,657.00 crore from ₹12,380.00 crore a year earlier. However, net income for the quarter reached ₹13,438.00 crore, reflecting an 8.5% year-on-year increase, with net margin improving by 40 basis points sequentially to 20.00%.

Operational Metrics and Cash Generation

TCS demonstrated robust cash flow generation, with operating cash flows equivalent to 130.4% of its net income during the December quarter. Operating margin remained stable at 25.20% compared with the previous quarter, indicating disciplined cost control amid uneven demand conditions across global markets. The company's total contract value (TCV) for the quarter stood at $9.30 billion.

AI Services Drive Growth

Artificial intelligence-led services continued to be a key growth driver for the company. TCS reported annualised AI services revenue of $1.80 billion, up 17.3% quarter-on-quarter in constant currency terms. Management reiterated its ambition to become the world's largest AI-led technology services company, guided by a five-pillar strategy spanning infrastructure, platforms, applications, data, and intelligence.

AI Services Metrics:	Details
Annualised Revenue:	$1.80 billion
QoQ Growth:	+17.3% (constant currency)
Strategic Focus:	Five-pillar AI strategy

Chief Executive Officer K Krithivasan emphasized the company's focus on scaling its artificial intelligence-led services portfolio, which is increasingly becoming a key driver of long-term growth and client engagement.

Market Environment and Outlook

TCS operates in an environment where clients are increasingly prioritising cost optimisation and targeted digital investments rather than large-scale transformation projects. While this approach has tempered headline growth, the company's scale, diversified client base, and strong execution capabilities continue to support margins and cash generation. The dividend announcement underscores TCS's commitment to returning excess cash to shareholders, backed by robust operating cash flows and a resilient balance sheet.