Tata Consultancy Services is cutting back on headcount even as salary hikes return to their usual cycle, with both trends .
The company ended FY26 with 5,84,519 employees, down by 23,460 from a year earlier.
At the same time, it has rolled out annual increments effective April, returning to its typical appraisal cycle after last year’s delay, when hikes were pushed back by several months.
Put together, the signals are shifting. The workforce has shrunk, hiring hasn’t stopped, pay cycles have stabilised, and the company is leaning more heavily on AI-led capabilities.
TCS said increments have been rolled out across grades, with top performers set to receive double-digit hikes, though it did not disclose the overall average increase.
That suggests pay is becoming more differentiated, even as the timing of hikes returns to normal.
Hiring, meanwhile, is continuing but in a narrower band. The company said recruitment is now focused on areas such as artificial intelligence, cloud, cybersecurity and digital engineering.
This points to a shift away from broad-based hiring towards demand-led, skill-specific roles.
A large part of that shift is being driven by AI.
TCS said over 270,000 employees now have advanced skills in artificial intelligence and machine learning, reflecting a significant push to build capabilities internally.
Employees logged 69 million learning hours during the year, as the company scaled up reskilling efforts to match changing project requirements.
It also said nearly half of internal role allocation is now handled through AI-based systems that match employees to projects, reducing the need for external hiring in some areas.
The result is a different workforce model. Instead of expanding headcount in line with growth, more work is being absorbed internally through reskilling and AI-driven deployment.
The pattern is becoming clearer. Hiring continues, but not evenly. Pay has returned to a more predictable cycle, but increases are not uniform. And a growing share of work is being redistributed within the existing workforce.
For employees, that means outcomes are increasingly tied to skills and performance rather than tenure, with opportunities strongest in areas aligned with AI and digital demand.
TCS is still growing, but the way it builds and deploys its workforce is changing, with headcount, hiring and pay no longer moving in the same direction.