Tech Mahindra reported a net decline of 3,098 employees in the December quarter, with its core IT workforce shrinking by 2,334, reflecting continued caution across India’s IT services sector despite improving financial performance.
The company’s total headcount stood at 149,616 employees at the end of the third quarter of FY26, down sequentially and 872 lower on a year-on-year basis, according to its quarterly disclosures released on January 16.
The reduction came even as employee attrition eased. Last twelve-month attrition fell to 12.3 percent, compared with 12.8 percent in the previous quarter, signalling improved retention amid slower hiring.
Sector-wide moderation in hiring
Tech Mahindra’s workforce decline mirrors a broader trend across the IT services industry, where companies are recalibrating staffing levels amid client caution and operational restructuring.
India’s largest IT services firm, Tata Consultancy Services, reported a net reduction of 11,151 employees during the same period, as it undertook business restructuring and outlined plans to reduce its workforce by about 2 percent, or roughly 12,000 employees.
In contrast, Infosys added 5,043 employees in the third quarter, marking the sixth consecutive quarter of net headcount growth, while HCLTech reported a marginal decline of 261 employees, highlighting divergent hiring strategies across the sector.
The headcount decline at Tech Mahindra came alongside a sharp improvement in operating performance. The company reported a 14.1 percent year-on-year increase in consolidated net profit to ₹1,122 crore for the quarter ended December 31, 2025.
Revenue from operations rose 8.3 percent to ₹14,393 crore, while operating efficiency improved significantly. EBIT surged 40.1 percent year-on-year to ₹1,892 crore, with the EBIT margin expanding to 13.1 percent, supported by cost optimisation and margin recovery initiatives.
Tech Mahindra also reported new deal wins worth $1.1 billion during the quarter, up 47 percent year-on-year, indicating early signs of demand stabilisation in select verticals and geographies.
The company’s Q3 results underline a common industry pattern: profit recovery and deal traction without a parallel rebound in hiring. As clients continue to scrutinise spending and companies focus on productivity and utilisation, workforce growth is likely to remain selective in the near term.
The pace of hiring, executives have indicated across the sector, will depend on sustained deal conversions and clearer signals of demand recovery in the coming quarters.