Both Tata Consultancy Services and HCL Technologies reported a sequential decline in headcount in the December quarter, underscoring how the country’s large IT services firms are recalibrating workforce structures.
At the end of the third quarter, TCS’ global headcount stood at 582,163 employees, down 11,151 sequentially. HCLTech also reported a marginal decline of 261 in its employee strength during the quarter.
At TCS, management explicitly linked the decline to a combination of restructuring-led exits and ongoing attrition. Addressing workforce movements during the analyst call, Sudeep Kunnumal, CHRO, TCS, said the company was continuing with its previously announced restructuring exercise.
Sudeep Kunnumal on workforce restructuring
“What we had announced as part of the restructuring, we continue to look (to) support people with deployment into future roles and wherever we are not finding success is where we are releasing,” Kunnumal said. During the year, TCS released around 1,800 employees as part of this process, which management stressed was not driven by numerical targets. “We are not really going after a number. It’s purely a process,” he said.
The declining headcount comes when both companies showed constant currency growth in revenues sequentially, reinforcing the increasing decoupling of headcount and revenue growth for IT firms. This also points to the evolution of delivery models from headcount based billing, to efficiency and outcome led models.
Beyond restructuring-related releases, the remaining decline is likely attributable to voluntary attrition. TCS’ last twelve months (LTM) voluntary attrition in IT services stood at 13.5% at the end of the quarter, up 20 basis points sequentially, indicating continued employee churn even as hiring continues in specific skill areas.
Attrition trends
HCLTech, by contrast, reported an improvement in attrition trends. Its LTM attrition declined to 12.4% during the quarter, compared with 12.6% in the previous quarter, and 13.2% in the same quarter of the previous fiscal.
Despite the headline headcount decline, both firms continued to invest in fresher hiring, albeit with a sharper focus on skill alignment. HCLTech added 2,852 freshers during the quarter, significantly higher than the previous quarter. The company also outlined a differentiated approach to campus recruitment, with its entry-level elite cadre expected to command salaries in the range of Rs 18 lakh to Rs 22 lakh per annum, nearly three to four times higher than the normal fresher band.
“We have to be competitive enough to attract high-level talent,” Ramachandran Sundararajan, chief people officer at HCLTech said. Management said fresher recruitment would increasingly depend not just on skills but also on candidates’ academic specialisation.
TCS, meanwhile, reiterated its emphasis on hiring fresh graduates with next-generation capabilities, though it did not give a number, or any numerical guidance on fresher hirings. “We hired a significant number of AI-native fresh graduates,” Kunnumal said, adding that the company’s initial learning programmes have been enhanced to include Gen AI as an integral part of the curriculum.
AI-led skilling emerged as a central workforce theme at both firms. At TCS, Kunnumal said the company continues to make significant investments in building high-performance workforce with future-ready skills. Year-to-date, employees have completed 51.2 million learning hours, with 3.8 million competencies acquired.
The company now has over 217,000 employees with higher-order AI skills, a threefold increase over last year. “AI is creating new roles, such as rapid-build engineers and leads, which are increasingly vital for the future,” he said.HCLTech echoed similar priorities, noting that data skills would emerge as increasingly important and that shifts in workforce mix would be aligned to the services delivered to customers.