Tech Mahindra Q1 profit rises 34%, headcount falls for third straight quarter

Tech Mahindra Ltd., one of India’s top IT services providers, reported a net decline of 214 employees in the quarter ended June 30, 2025 (Q1 FY26), as per its stock exchange filing and quarterly earnings report released on 16 July. This marks the third consecutive quarter of workforce reduction for the company.

The total headcount at the end of the quarter stood at 1,48,517, compared to 1,48,731 in the previous quarter. However, on a year-on-year basis, the company registered a net addition of 897 employees.

In the same investor communication, Tech Mahindra disclosed that its last twelve-month (LTM) attrition rate rose to 12.6%, up from 11.8% in the previous quarter, pointing to rising churn even amid restrained hiring.

Profit Up, Hiring Down

Despite the headcount contraction, Tech Mahindra delivered strong financial results for Q1 FY26, according to its BSE filing. The company posted a 34% year-on-year jump in net profit, reaching ₹1,141 crore, compared to ₹852 crore in the corresponding quarter last year.

Consolidated revenue rose 3% YoY to ₹13,351 crore, while total expenditure marginally declined to ₹11,952 crore. This effective cost management helped lift profitability and contributed to an Ebit margin improvement of 260 basis points year-on-year, to 11.1%. Sequentially, margins improved by 60 basis points.

The company's performance comes amid a larger trend of IT majors prioritising operational efficiency over headcount growth. Revenue from the Americas—which accounts for nearly half of Tech Mahindra’s business—fell 5.9% year-on-year, highlighting regional pressures despite the overall profitability.

Industry Comparison

Tech Mahindra’s headcount trend is in line with mixed hiring patterns across the Indian IT sector.

According to disclosures by peers:

• Tata Consultancy Services (TCS) added 5,090 employees in Q1 FY26, as per its own quarterly results filed with the exchanges earlier this month.
  
  

• HCLTech, by contrast, reported a net headcount decline of 269 employees, though it onboarded 1,984 freshers in the quarter, according to its financial disclosures.
  
  

Tech Mahindra has not publicly disclosed fresher hiring figures for the quarter in its Q1 FY26 investor presentation or earnings call, but the net headcount dip suggests a cautious approach to expansion.

Strategic Context

The decline in staffing comes even as CEO and MD Mohit Joshi, who took over in late 2023, continues to focus on margin improvement and operational stability. With three straight quarters of declining headcount, the company appears to be prioritising leaner teams and project-based hiring in a volatile demand environment.

“While profits are up, companies are clearly being more measured in how they scale,” said a senior IT analyst quoted in Moneycontrol’s post-results coverage on 16 July. “It’s a shift from growth-at-all-costs to profitability-at-all-costs.”

The increase in attrition—despite fewer hiring cycles—also points to ongoing challenges in employee engagement and talent retention, even as firms rebalance their workforce strategies post-pandemic.

As macroeconomic conditions remain mixed, Tech Mahindra and its peers are likely to continue taking a conservative approach to hiring. Analysts believe firms will keep a close eye on demand revival signals before ramping up recruitment in any significant way.

For now, Tech Mahindra’s operational and financial discipline appears to be yielding returns—but the long-term impact of successive workforce reductions on project execution and innovation remains to be seen.