TCS appraisal: Managers asked to put 5% of employees in lowest performance band; what it means

India's largest IT services exporter Tata Consultancy Services (TCS) directed managers to identify about 5% of employees for its lowest performance rating during the latest appraisal cycle, Mint reported on Monday, citing an internal email and company executives.

The move came about a month after TCS completed a workforce reduction affecting around 2% of staff, or about 12,200 employees, according to the report.

An April email from a human resources executive to a business unit head asked managers to "review critically and share the list of associates who can be considered for Band D, thereby meeting the agreed 5% distribution," Mint reported.

Business unit heads eventually classified roughly 3% of employees, or about 17,500 people, as underperformers, the newspaper said.

Employees placed in Band D face lower variable pay, removal from projects and placement on performance improvement plans, with the risk of termination if performance does not improve.

The company's top performers received salary increases of about 6% in annual compensation letters issued on Sunday, the report added.

TCS ended the 2025-26 fiscal year with 584,519 employees, down from 607,979 a year earlier.

TCS CEO and Managing Director K Krithivasan had insisted that the layoffs were not about AI-led productivity gains replacing jobs, but rather the inability to redeploy certain roles effectively in the company’s new structure.

“This is not because of AI giving some 20% productivity gains. We are not doing that,” he had said. “This is driven by where there is a skill mismatch, or, where we think that we have not been able to deploy someone.”

Q4 Results

The IT firm reported a consolidated net profit of ₹13,718 crore in fourth quarter of previous financial year (Q4FY26), marking an increase of 12% from ₹12,224 crore in the same period in the year-ago period. On a sequential basis, TCS' net profit rose 29% from ₹10,657 crore.

TCS' revenue from operations jumped 10% annually to ₹70,698 crore at the end of March quarter from ₹64,479 crore.

The company's annualised revenue from artificial intelligence crossed $2.3 billion in the fourth quarter of FY26.

For financial year 2025-26, TCS' net profit came in at ₹49,210 crore compared with ₹48,553 crore in the previous financial year. The company clocked operating margin of 25%, its highest in last four years.