In one embodiment, a method includes monitoring traffic in a Segment Routing (SR) network through a collection of a Segment Routing Demand Matrix (SRDM) at a Traffic Engineering (TE) system operating at a network device, receiving topology information for the SR network at the TE system, modeling the SR network based on the topology information and the SRDM at the TE system, identifying a violation of a constraint in the SR network at the TE system, and running an optimization algorithm for SR optimization of constraints in the SR network at the TE system, wherein the optimization comprises limiting a number of Segment Identifiers (SIDs) used in a SR policy implemented to resolve the constraint violation. An apparatus is also disclosed herein.