Indian IT services companies are seeing a rise in revenue per employee, a key efficiency metric, as firms reposition around artificial intelligence and move away from headcount-led growth models. The trend follows a period of post-pandemic overhiring and a subsequent demand slowdown that had weighed on productivity indicators.
Data compiled by UnearthInsight shows that Tata Consultancy Services recorded a 6.8% increase in revenue per employee to $51,353 in FY26 from $48,342 in FY24. Infosys saw the metric rise 4.8% over the same period to $61,322. HCLTech posted the strongest growth, with a 10.7% increase to $64,548. In contrast, Wipro saw a 6.3% decline to $43,270, while Tech Mahindra remained broadly flat, with a dip in FY25 followed by a recovery in FY26.
“The IT majors don’t discuss productivity directly but lately we’ve been hearing more about ‘headcount rationalisation or headcount optimisation,” Gaurav Vasu, CEO of UnearthIQ, said.
At TCS, a restructuring exercise concluded in the fourth quarter of FY26 led to about 8,000 layoffs. The company’s headcount declined 2.83% over two years to 584,519. Infosys added employees broadly in line with revenue growth, taking its headcount up 3.58% to 328,594. Wipro’s workforce rose 3.46% to 242,156, while HCLTech’s headcount remained largely unchanged at 227,181. Tech Mahindra reported a 1.49% increase to 147,623.
“The only IT firms truly moving towards non-linearity are Persistent Systems and HCL Tech. The latter has had an almost stagnant headcount,” Vasu said.
From Headcount to High-Efficiency
Analysts said the shift reflects a structural move towards productivity-led growth as AI tools begin to influence delivery models. “As the linear measure of headcount growth and revenue fades, revenue per employee is becoming a critical factor, as AI has helped increase productivity significantly across all levels,” Namratha Darshan, chief business officer for ISG India, said. “Headcount growth is no longer a measure of success for IT firms. Revenue per employee is up about 8% for managed services sector,” she added.
At the same time, analysts cautioned that the improvement in the metric is not solely attributable to AI. “There is an indication that they’re getting more billable hours from existing resources, not necessarily that they are more productive. Providers also continue to take a wait-and-see approach due to hiring due to the uncertain demand environment, which is also one of the reasons we’re seeing elevated utilisation rates and moderated fresher hiring,” Darshan said.
The metric is also gaining prominence as AI-native firms with small teams report rapid revenue growth. “We’ve been tracking the metric for a year now and absolutely believe it’s going to be crucial moving forward. Another metric that will gain importance is margin per FTE (full-time employee). This will eventually be followed by GCCs as well,” Ashwin Venkatesan, executive research leader at HfS Research, said.
Utilization vs. Innovation
However, analysts said the sector is still some distance from establishing a sustained shift. “There is a new undeclared internal expectation of getting to $100K per employee up from the current levels,” Jimit Arora, CEO of Everest Group, said. “Revenue per FTE depends on utilisations and if service providers leverage subcontractors more than usual. In conjunction with new commercial models (hybrid, outcome based, designed for AI), there are multiple options for service providers to increase this metric,” he added.
Vasu said business mix, geography and the growth of platform-led offerings would also influence outcomes. “It’s not just about tamping down hiring but it depends the business mix, the geography mix, the India business and how the product and platform businesses are growing,” he said.