TCS Managers Told To Categorise 5% of Staff in D Band for ‘Lowest Performance’: Report

Tata Consultancy Services (TCS) has instructed its management teams to assign at least 5 per cent of its global workforce to "Band D", the company's lowest performance rating category. The mandate, communicated through internal correspondence during the latest appraisal cycle, has renewed job security apprehensions among employees at India's largest IT services exporter.

The directive follows a major restructuring campaign over the past fiscal year, during which the firm reduced its total headcount by more than 23,000 personnel. TCS Salary Hike: Average 5% Increment, Employees Flag ‘Reduced CTC’ After Appraisals.

The 5 Per Cent Underperformance Distribution Target

The formalised push to categorise employees under the lowest performance tier was detailed in an April email sent from a TCS human resources executive to a business unit head. "Please review critically and share the list of associates who can be considered for Band D, thereby meeting the agreed 5% distribution," the internal email stated. While Band D classifications have historically existed within the company's bell-curve appraisal model, company executives noted that this is the first instance where human resources has explicitly pushed a fixed percentage target onto teams.

Before the HR intervention, business unit heads had voluntarily identified approximately 17,500 employees - roughly 3 per cent of the total workforce - as underperformers, creating administrative pressure to close the gap to the 5 per cent objective. Given TCS's current headcount of 5,84,519 workers, meeting the 5 per cent distribution target would place more than 29,000 employees in the lowest tier.

Implications of the 'Band D' Designation

Sinking into the lowest rating band triggers immediate administrative and financial adjustments for impacted personnel. Employees placed within Band D face substantial reductions in variable compensation payouts, removal from active client projects, and mandatory placement on formal Performance Improvement Plans (PIPs). Failure to meet the strict metrics outlined within these remediation tracks carries the explicit risk of contract termination. The move contrasts sharply with the compensation adjustments finalised over the weekend for the firm's top-tier performers, who received average salary increases ranging from 6 per cent to double digits depending on their performance brackets.

Background on Recent Tech Sector Headcount Reductions

The targeted evaluation strategy arrives roughly one month after TCS concluded its largest workforce consolidation exercise in recent history. The technology giant closed the 2025-2026 fiscal year with 5,84,519 employees, reflecting a steep decline from the 6,07,979 personnel reported in the previous fiscal year. This drop includes a targeted reduction of roughly 12,200 roles - approximately 2 per cent of the company's total staff strength - which primarily impacted middle- and senior-management layers. Company insiders noted that many of the individuals affected during that multi-month retrenchment had previously accumulated low performance ratings. TCS CEO K Krithivasan Salary Rises 6.3% to INR 28.1 Crore in FY26, Annual Report Reveals.

Strategic Transition and Corporate Position

The tightening of performance standards occurs as global IT services providers aggressively recalibrate their operating costs to protect margins against compressed discretionary spending and elongated client decision-making cycles. Additionally, firms are shifting capital toward advanced automation and digital transformation services. Despite the overlapping timelines between the performance push and industry-wide technical shifts, TCS leadership has rejected assertions that operational changes are being accelerated to swap human personnel for automated systems.

Addressing previous inquiries regarding the company's workforce adjustments, TCS Chief Executive Officer and Managing Director K. Krithivasan emphasised that the headcount reductions were structural rather than tech-driven. "This is not because of AI giving some 20% productivity gains," Krithivasan stated, clarifying that the job adjustments were tied to the logistical challenges of redeploying specific niche roles within the firm's newly streamlined operating architecture.

(The above story first appeared on LatestLY on May 19, 2026 08:21 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).