tcs tata consultancy services job cuts global brokerage jefferies citi cuts target prefers hcltech infosys

India’s largest IT services company Tata Consultancy Services (TCS) is back in the spotlight but not for the right reasons. The IT major has announced plans to reduce its headcount by 12,000 in FY26, triggering sharp reactions from brokerages and a nearly 1.5 per cent fall in its stock price on Monday.

What's the reason behind the job cuts 

The company clarified that the job cuts aren’t a direct result of AI-led efficiency gains but stem from challenges in deploying talent effectively. TCS said it would continue hiring high-quality professionals while exiting roles that are either skill-mismatched or unutilised. The downsizing will affect middle and senior-level executives the most, along with some entry-level staff on the bench for extended periods.

Jefferies picks Infosys and HCLTech

Global brokerage Jefferies isn’t too optimistic. It warned that the headcount trim could result in near-term execution delays and possibly spike attrition over the longer term. Amid cost pressures and increasing automation, Jefferies prefers Infosys and HCL Technologies among the large-cap IT names, and Coforge and Mphasis in the mid-cap pack.

Citi reiterates 'Sell'

Another global firm, Citi Research, has retained its 'sell' rating on TCS and kept the target price at Rs 3,135. The brokerage highlighted weakness in core markets and flagged concerns over margin and cash flow trajectory. Citi noted that any meaningful upside in the stock remains capped unless these key metrics improve.

Policy changes add to pressure

The company recently rolled out a revised HR policy mandating 225 days of billability per year and capping bench time to 35 days—measures that further tighten utilisation norms. While TCS said it would offer severance, insurance extensions, and outplacement support, analysts remain cautious about morale and long-term impact on delivery.

Stock under pressure

TCS shares slipped over 1 per cent intraday to Rs 3,088.90, underperforming peers. The pressure could persist if deal wins and cost efficiencies fail to offset talent optimisation risks in the coming quarters.

Outlook

With digital transformation at a crossroads and global tech spends turning selective, analysts believe IT firms with higher agility in upskilling, execution, and automation will thrive. For now, the Street is keeping a close watch on how TCS navigates this transition.