Tata Consultancy Services has instructed managers to classify 5% of its 6,14,795 employees in the lowest performance bracket, a move that could trigger fresh layoffs after last year’s retrenchment, according to internal emails reviewed by livemint.com.
The directive, issued in early May 2026, asks delivery heads to tag roughly 30,000 staff as “underperformers” during the ongoing annual appraisal cycle that ends on 31 May. Emails seen by the newspaper show HR head Milind Lakkad and COO N. Ganapathy Subramaniam pressing unit leaders to enforce the quota strictly, reversing the previous informal cap of 2-3%. Managers have been told to complete the rating exercise by 20 May and initiate performance-improvement plans immediately after.
The push comes as TCS fights margin pressure after posting its first-ever revenue decline since listing, with FY26 revenue slipping 0.5% to $30.02 billion despite operating margins rising 70 basis points to 25%, livemint.com reports. Rivals Infosys and Wipro have already pruned similar low-rating buckets to 3-4%, making TCS’s 5% target the highest among India’s top three IT firms. Industry executives told the paper that the classification is often a precursor to forced exits, and placement firms estimate severance costs could reach ₹1,200 crore if even half of the tagged employees are asked to leave.
TCS has not disclosed the timeline for any resultant separations, but insiders expect the first exits to begin in July once the appraisal cycle closes. Investors will watch the company’s Q1 FY27 earnings call on 15 July for commentary on headcount and utilisation targets. A spokesperson told livemint.com that the exercise is “business-as-usual performance management” and declined to share numbers.
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