India’s top IT services companies are showing a visible disconnect between revenue movement and workforce expansion. December-quarter disclosures from Tata Consultancy Services (TCS), Infosys, HCLTech, Wipro, and Tech Mahindra indicate that changes in revenue are no longer accompanied by proportional shifts in employee count, utilisation or attrition.
Executives across the companies repeatedly pointed to productivity gains, margin stability, and capacity built ahead of demand as the primary drivers of performance, rather than workforce expansion.
What the Numbers Say
TCS reported constant-currency revenue growth of 0.8% quarter-on-quarter in Q3 FY26, even as its total workforce declined by over 11,000 employees sequentially. Despite the reduction in headcount and an attrition rate of 13.5% over the past year, the company maintained a healthy operating margin of 25.2% and generated cash flows equivalent to 130% of net profit. Management said these outcomes were driven by productivity gains and operational efficiencies rather than workforce expansion.
Infosys followed a similar trajectory, posting sequential constant-currency revenue growth of 0.6% in the December quarter. Employee numbers increased marginally to about 3.37 lakh, but utilisation excluding trainees fell by 100 basis points to 84.1% as the company continued to onboard freshers ahead of demand, framing the dip in utilisation as a strategic investment in future capacity.
HCLTech delivered the strongest revenue performance among peers, with constant-currency growth of 4.2% quarter-on-quarter. Total headcount stood at 2.26 lakh, largely unchanged sequentially, with a small net decline even as nearly 2,900 freshers were added. EBIT margin for the quarter—denoting core operational profitability—was 18.6%, excluding the one-time impact of the new labour code.
Wipro reported sequential constant-currency revenue growth of 1.4% in the December quarter, though year-on-year growth remained negative. Headcount rose to about 2.42 lakh, but utilisation excluding trainees declined to 83.1% from 86.4% in the previous quarter.
Tech Mahindra posted sequential constant-currency revenue growth of 1.7%, with total headcount at 1.50 lakh, down nearly 900 employees year-on-year. Operating margin, however, expanded to 13.1%, marking the ninth consecutive quarter of margin improvement, supported by higher productivity and improved delivery efficiency.
During the earnings call, Tech Mahindra’s chief executive and managing director, Mohit Joshi, said the company was using efficiency gains in fixed-price programmes to drive growth rather than replacing attrition.
“As we become a lot more efficient in our fixed-price programmes, we free up capacity for us,” he said. Joshi added that revenue per employee had continued to increase even as headcount had “more or less stayed stable” over the past few years, with higher productivity expectations across development and support roles.
Decoupling of Revenue Growth
Across companies, the quarterly results indicate that revenue performance is no longer aligned with workforce movement. This is a departure from earlier growth cycles, where hiring closely tracked revenue expansion.
According to Biswajeet Mahapatra, principal analyst at Forrester, the emerging decoupling of revenue growth and headcount reflects both structural and cyclical forces at play in Indian IT.
He tells AIM that the improvement in productivity and revenue per employee is “partly structural due to automation, large-scale AI adoption and tighter pyramid management,” but also “partly cyclical because muted deal ramp-ups and selective hiring temporarily boost per-employee metrics.”
The durability of this shift, he adds, will depend on how quickly discretionary spending and new transformation programmes recover.
However, Madhu Bandarapu, chief delivery officer at Hyniva, an IT services and consulting firm, asserts that a structural shift is now underway across the services industry, with clients increasingly being promised efficiency gains of 20–30% on contracts, driven by the adoption of enterprise AI tools.
“AI is not being positioned as a fully autonomous replacement, but clearly as a productivity enhancer,” he observes.
Developers are using tools such as coding copilots to improve output, while testing, documentation, and product support functions are also seeing automation gains, Bandarapu says. As a result, IT services firms are under pressure to deliver significant efficiency improvements using their existing workforce.
“The push over this year and next will be to extract 20–30% productivity gains from current teams and contracts,” he shares, adding that this is becoming especially critical during contract renewals.
“Companies that can blend AI-based solutions into their delivery models and demonstrate these efficiency gains will have a clear advantage.”
While this could moderate traditional hiring at mid- to senior-level roles, Bandarapu expects hiring at lower bands to continue. “Firms still need talent that can work alongside these tools, allowing productivity gains to be achieved at a lower cost.”
However, he notes that the trends point to a broader shift away from headcount-linked growth models. “We are clearly moving towards outcome-based, transaction-based and gain-share models. This trend is set to continue and will become more pronounced over time.”
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