Tata Consultancy Services announced to reduce its workforce by around 2%, which is more than 12,000 jobs, in the financial year 2025-26. The change is expected to primarily affect workers in middle and senior management positions. Is there a correlation between the TCS’s rising attrition and the stock price? TCS’s share price has seen some corrections as the company’s attrition rate increased.
In Q1 FY26, the stock price showed a more definite downward trend with attrition being at its peak, and TCS announced plans to fire 12,000 employees.
In the last four quarters, the attrition rate of TCS has steadily increased from 12.1% in Q1 FY25 to a two-year high of 13.8% in Q1 FY26. As attrition inched up through Q3 and Q4 FY25, the stock saw mild to moderate corrections, while the stock price rose strongly when attrition was lower in Q1 and Q2 of FY25.
There is a noticeable negative correlation during this timeframe, in which an increase in the attrition rate aligns with a decline in the TCS stock price, especially from Q3 FY25 onwards.
TCS’s stock performance
The share price of TCS has fallen 0.66% in the last five trading sessions. The stock has declined over 9% in the last one month and 22% in the past six months. The share price of TCS has erased 28% of investors’ wealth in the last one year.
What could have led to fall in stock prices?
Increasing employee attrition and instability in the workforce seem to have led to a cautious sentiment among investors, in addition to various other business factors. The rising attrition likely reflects talent retention challenges amid restructuring, which has weighed on investor sentiment alongside broader concerns about layoffs and digital transformation risks.
| Quarter | TCS Attrition Rate (LTM) | Stock Price Trend |
| Q1 FY25 | 12.10% | Positive momentum near Rs 3,950-3,980 |
| Q2 FY25 | 12.30% | Stable to slightly positive near Rs 4,200-4,300 |
| Q3 FY25 | 13.00% | Mild correction to Rs 3,250-3,370 |
| Q4 FY25 | 13.30% | Slight decline to Rs 3,200-3,350 |
| Q1 FY26 | 13.80% | Noticeable dip by 3.5% post-earnings, ending near Rs 3,135 |
This relationship helps illustrate how employee turnover and workforce stability concerns impact market valuation perceptions for TCS in FY25-FY26.
As reported by Reuters, Tata Group is retraining and reallocating employees as it ventures into new markets, invests in innovative technologies, and implements AI. However, around 12,200 jobs will be eliminated as part of this process.
“This transition is being planned with due care to ensure there is no impact on service delivery to our clients,” the company said, reports Reuters.
