Kolkata, July 30 – Tata Consultancy Services (TCS), India’s largest IT services firm, has announced plans to reduce its global workforce by approximately 2 percent, affecting nearly 12,000 employees over fiscal year 2025–26. CEO K. Krithivasan emphasized that the decision results from skill mismatches and deployment challenges, not automation or artificial intelligence (AI).
Background / Details
Krithivasan clarified the rationale during an interview:
“This is not because of AI giving some 20 percent productivity gains… This is driven by skill mismatch or where we have not been able to deploy someone.”MoneyControlmint
TCS trained over 550,000 employees in foundational AI skills and more than 100,000 in advanced digital technologies, yet acknowledged gaps in redeployment—especially among mid‑ to senior‑level professionals with legacy roles that no longer align with client requirements.
The company is shifting toward a faster, agile, product‑aligned delivery model, moving away from traditional waterfall-based project structures. Krithivasan noted that roles such as project and program managers are less relevant under the new model.
The layoffs will span mid-level and senior employees, along with some junior staff who have remained on the bench for extended periods—typically 3 to 18 months. (Source : Swarajyamag, India Today and The Times of India)
Employee Support and Transition Measures
TCS has pledged a compassionate, phased rollout of the job cuts:
“We will do this in a very, very compassionate way.”
Affected employees will receive:
- Notice‑period pay and severance packages
- Extended health insurance coverage
- Access to counselling and outplacement services
Where feasible, internal redeployment opportunities will be offered.
(Source :MoneyControlAngel One)
Impact / Responses
The scale of this downsizing—approximately 12,000 roles, or 2% of TCS’s global workforce—is one of the largest in the company’s history, and marks a major shift in an industry accustomed to stability.
Reuters reports that the move may cut employee-related costs by up to 4 percent, equivalent to about 12 percent of TCS’s net profit for fiscal year 2025.(Source : Reuters)
CP Gurnani, former CEO of Tech Mahindra, termed the decision a signal of the end of large-scale hierarchical staffing, urging a shift toward outcome-based models.
Gartner India, as referenced by the Times of India, estimates nearly 45 percent of global IT services firms may pursue similar skill-based restructuring in the year ahead.
Meanwhile, a senior India IT union raised concerns over the legality of the move, prompting official scrutiny. The Ministry of Information Technology has reportedly begun monitoring employee welfare during the transition.
Broader Industry Context
TCS joins several major Indian IT firms managing pressure from sluggish demand in North America and Europe, cost control, and changing client expectations. Bloomberg and Reuters describe the company’s transformation efforts as part of a broader “IT playbook” shift.
Despite the cuts, TCS continues to secure high-value deals. Notably, it recently signed a $1.1 billion digital transformation contract with a European bank.
Shares in TCS saw a moderate 1.8 percent drop in response to the announcement, underscoring investor caution amid the company’s restructuring plans.
Workforce and Skills Table
| Metric | Figure/Detail |
|---|---|
| Estimated Layoffs | ~12,000 roles (≈ 2 % of global headcount) |
| Training Undertaken | ~550,000 employees (basic AI), ~100,000 (advanced) |
| Affected Levels | Mid- and senior-level roles, some extended-bench juniors |
| Projected Cost Savings | Up to 4 % of payroll; circa 12 % of net profit |
| Strategic Shift | From waterfall to product-aligned, agile delivery |
Looking Ahead: TCS’s Commitment to Workforce Transformation
TCS’s decision reflects a strategic realignment, not a retreat prompted by AI. As CEO Krithivasan said:
“Our focus remains on people — those ready to grow with the future will continue to find space within TCS.”MoneyControlSwarajyamag
This restructuring marks a pivotal transition from traditional service models to a leaner, future-ready workforce—one better suited to evolving global client expectations and technological shifts in the industry.
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