diff --git a/defaults/main.yml b/defaults/main.yml
index a7aa4bfe..722c63ae 100644
--- a/defaults/main.yml
+++ b/defaults/main.yml
@@ -178,6 +178,13 @@ swift_rabbitmq_telemetry_servers: "127.0.0.1"
 swift_rabbitmq_telemetry_use_ssl: "False"
 
 ## General Swift configuration
+# We are not capping the default value for these swift variables which define
+# the number of worker threads for each of the swift services (except the swift
+# proxy workers when proxy is in a container) because of the performace impact
+# that may be seen due to capping worker threads for swift services.
+# We would like to calculate the default value using vCPUs for good performance
+# of swift services.
+
 # If ``swift_account_server_replicator_workers`` is unset the system will use half the number
 # of available VCPUS to compute the number of api workers to use.
 # swift_account_server_replicator_workers: 16
@@ -203,8 +210,13 @@ swift_rabbitmq_telemetry_use_ssl: "False"
 # swift_object_server_workers: 16
 
 # If ``swift_proxy_server_workers`` is unset the system will use half the number
-# of available VCPUS to compute the number of api workers to use.
-# swift_proxy_server_workers: 16
+# of available VCPUS to compute the number of api workers to use. Capping this
+# value at 16 if the swift proxy is in a container and user did not define
+# this variable.
+swift_proxy_server_workers_max: 16
+swift_proxy_server_workers_not_capped: "{{ [ansible_processor_vcpus|default(2) // 2, 1] | max }}"
+swift_proxy_server_workers_capped: "{{ [swift_proxy_server_workers_max, swift_proxy_server_workers_not_capped|int] | min }}"
+swift_proxy_server_workers: "{{ (inventory_hostname == physical_host) | ternary(swift_proxy_server_workers_not_capped, swift_proxy_server_workers_capped) }}"
 
 # These are the storage addresses used to define the networks for swift storage and replication
 # These are calculated by the tasks based on the "storage_network" and "replication_network" values
diff --git a/releasenotes/notes/capping_swift_services_workers-5ac9ecb28f56469f.yaml b/releasenotes/notes/capping_swift_services_workers-5ac9ecb28f56469f.yaml
new file mode 100644
index 00000000..34241cd1
--- /dev/null
+++ b/releasenotes/notes/capping_swift_services_workers-5ac9ecb28f56469f.yaml
@@ -0,0 +1,8 @@
+---
+features:
+  - Capping the default value for the variable ``swift_proxy_server_workers``
+    to 16 when the user doesn't configure this variable and if the swift proxy
+    is in a container. Default value is half the number of vCPUs available on
+    the machine if the swift proxy is not in a container. Default value is half
+    the number of vCPUs available on the machine with a capping value of 16
+    if the proxy is in a container.
diff --git a/templates/proxy-server.conf.j2 b/templates/proxy-server.conf.j2
index 2001efe6..29172671 100644
--- a/templates/proxy-server.conf.j2
+++ b/templates/proxy-server.conf.j2
@@ -1,14 +1,11 @@
 # {{ ansible_managed }}
 
-{% set _api_threads = ansible_processor_vcpus|default(2) // 2 %}
-{% set api_threads = _api_threads if _api_threads > 0 else 1 %}
-
 [DEFAULT]
 # Disable stderr logging
 use_stderr = False
 bind_ip = 0.0.0.0
 bind_port = {{ swift_proxy_port }}
-workers = {{ swift_proxy_server_workers | default(api_threads) }}
+workers = {{ swift_proxy_server_workers }}
 
 user = {{ swift_system_user_name }}
 log_facility = LOG_LOCAL1