Tech Mahindra Reports Third Straight Quarter of Workforce Decline Despite Yearly Growth

Tech Mahindra’s total headcount fell by 622 in the quarter ending June 30, 2025, marking the third consecutive quarter of reduction for the IT services firm.

The company’s headcount stood at 1,48,517 in Q1FY26, even though it recorded a year-on-year net addition of 897 employees.

Attrition Inches Up

The company’s last twelve-month (LTM) attrition rate increased to 12.6 percent from 11.8 percent in the previous quarter, indicating rising churn despite restrained hiring.

Financial Performance: Profit Rises Despite Leaner Workforce

On July 16, Tech Mahindra reported a 34 percent year-on-year increase in net profit for Q1 FY26, reaching ₹1,141 crore compared to ₹852 crore in the same period the previous year.

This profit growth came as total expenditure remained flat, slightly decreasing to ₹11,952 crore.

Revenue Trends

Consolidated revenue rose by 3 percent year-on-year to ₹13,351 crore. However, revenue from the Americas—contributing nearly half of the company’s overall revenue—fell by 5.9 percent year-on-year.

Margin Expansion

The company’s Ebit margin expanded by 260 basis points year-on-year to 11.1 percent. Sequentially, the margin improved by 60 basis points, driven by effective cost management.

Quarterly Headcount Movement

Tech Mahindra reported a net decline of 214 employees compared to the previous quarter. As per its stock exchange filings, the total headcount at the end of Q1 FY26 stood at 1,48,517, down from 1,48,731.

Hiring Trends in the IT Industry

Hiring trends across the IT sector remained mixed in Q1 FY26. Tata Consultancy Services (TCS) reported an addition of 5,090 employees. On the other hand, HCLTech posted a headcount reduction of 269 employees but hired 1,984 freshers.

Tech Mahindra has not disclosed fresher hiring numbers for the quarter, indicating a cautious stance toward expansion, especially amid the ongoing trend of restrained recruitment.

Strategic Shift Towards Operational Efficiency

Since taking charge in late 2023, CEO and MD Mohit Joshi has steered the company toward improving margins and ensuring operational stability.

The consistent workforce reduction over three quarters suggests a strategy focused on leaner teams and project-specific hiring amid uncertain demand.

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

Talent Retention and Attrition Concerns

The rise in attrition, even with limited hiring, reflects the challenges companies face in retaining talent. It underscores the complexities of maintaining employee engagement and satisfaction during a transition in workforce management strategies.

Conservative Outlook Amid Macroeconomic Pressures

As economic signals remain uncertain, Tech Mahindra and its peers are expected to take a conservative stance on recruitment. Analysts anticipate that firms will delay aggressive hiring until there are clear signs of demand recovery.

While the company’s focus on financial and operational discipline has yielded positive returns in the short term, the broader impact of consecutive headcount reductions on long-term innovation and project delivery is yet to unfold.