TCS Q3: Employee Terminations to Continue, AI Boosts Growth Amidst Headcount Reduction

• TCS expects employee terminations to continue in Q4, with no specific target, following 1,800 exits in Q3 due to restructuring.
• The company reported a 13.91% drop in December quarter profit at Rs 10,657 crore, largely due to a one-time impact of new labour codes.
• TCS reduced its headcount by 11,150 in Q3, bringing the total employee strength to 5,82,163, continuing the workforce contraction from the previous quarter.
• Artificial intelligence-led tech spending boosted growth, with AI services generating $1.8 billion annually, comprising 5.8% of total revenue.
• The company set aside over Rs 2,100 crore for labour code provisions, including Rs 1,800 crore for gratuity and Rs 300 crore for leave encashments.

Why It Matters: TCS faces continued employee terminations and profit dip due to labour codes, but AI-led growth shows promise.