Tata Consultancy Services (TCS), India’s largest IT services provider, has officially announced its decision to cut around 12,200 jobs—constituting approximately 2% of its global workforce—over the course of the 2025-26 financial year. This step marks the biggest workforce reduction in the company’s history. TCS, which employs over 613,000 people worldwide, stated that the move is aimed at realigning its workforce for a “future-ready” organisation in the face of rapidly changing technological needs and evolving market demands.

The job cuts are set to impact employees globally, with a particular focus on middle and senior-level management. Those most at risk are professionals with over 10 years of experience, especially non-client-facing managers, project leaders engaged in outdated delivery models, and specialists in legacy technologies who have not successfully upgraded to new-age skills such as cloud computing, data analytics, and artificial intelligence.

Skills Mismatch

TCS leadership has clarified that the main reasons for the layoffs are not solely due to automation or artificial intelligence, though the broader technological disruption and tighter client budgets are major contributors. According to CEO K Krithivasan, the driving factor is a skills mismatch, along with difficulties in re-deploying employees into new projects or roles. The company has reported that efforts were made to reskill and redeploy staff, but not all transitions were possible. Besides, changes in TCS’s internal deployment policy now require employees to maintain at least 225 billable days a year, and restrict time spent on the ‘bench’ (period without a project) to 35 days. Failure to meet these criteria could lead to disciplinary action, further putting pressure on employees.

TCS has pledged to conduct the layoffs gradually and with compassion, ensuring that affected employees are provided with notice period compensation, severance benefits, extended insurance, and career transition and outplacement support. The company says it is taking all possible steps to soften the impact on those who will be leaving. Meanwhile, TCS has also delayed onboarding for some lateral hires due to changes in client project timelines and evolving business requirements.

The news has sent ripples through the Indian IT industry, which has traditionally viewed employment at TCS as stable during uncertain times. Employee unions have voiced discontent, labelling the retrenchments as unfair under prevailing economic conditions. According to industry experts, this move by TCS could signal a broader trend across the sector, given the rising reliance on digital technology, automation, and pressure on profit margins.

While artificial intelligence and automation remain significant themes for the future of IT, the TCS management insists that the current job cuts are more about strategic realignment and skill-readiness than immediate cost-cutting or AI-driven productivity gains. The IT major has reiterated its commitment to ongoing hiring in high-demand skill areas and continues to invest in upskilling and training existing staff for new-age technology roles.

TCS’s decision reflects the challenging environment faced by Indian IT companies, as global clients tighten their technology spending in light of weak global demand, trade uncertainties, and the relentless march of digital transformation. As the situation unfolds, all eyes remain on how TCS and the broader IT sector navigate this period of significant transition and transformation.

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