MUMBAI – Tata Consultancy Services (TCS), India's largest IT services company, has announced its most significant workforce reduction to date, with plans to lay off approximately 12,000 employees, representing about 2% of its global workforce, over the course of the current financial year (FY26). The move has sent ripples across the Indian IT sector, prompting concerns about job security amidst evolving industry dynamics.
According to TCS CEO K Krithivasan, this decision is primarily driven by the company's strategic push to become a "future-ready organization" and addresses instances of skill mismatch and an inability to effectively redeploy certain employees on ongoing projects. Krithivasan clarified that the layoffs are not a direct consequence of AI-led productivity gains, but rather a necessary realignment of the workforce to meet future demands.
The layoffs will predominantly affect mid-level and senior executives, particularly those who have been on the "bench" – a term for employees not currently assigned to client projects – for extended periods. The company aims to invest in new technological areas such as AI, data, cybersecurity, and cloud, while also expanding into new markets. This restructuring is intended to streamline operations and enhance efficiency in a challenging global economic environment.
Industry observers point to broader factors influencing this decision, including mounting margin pressures, a cautious demand environment, and the overarching impact of artificial intelligence and automation reshaping the IT services landscape. While AI isn't cited as the direct cause of job cuts, its influence is undoubtedly driving a shift towards different skill sets and more specialized roles within the industry.
TCS has stated its commitment to supporting affected employees through this transition, promising comprehensive assistance including notice period compensation, severance benefits, extended insurance coverage, and outplacement services to aid in their job search.
However, the announcement has drawn sharp criticism from employee unions in the IT sector, who have termed the mass sackings "illegal" and urged affected workers not to resign under pressure. Unions are calling for a revocation of the layoff plans, highlighting concerns about the psychological, emotional, and financial impact on thousands of families.
This unprecedented workforce reduction by TCS, a company long known for its job security, signals a significant structural shift in the Indian IT sector, potentially prompting other firms to re-evaluate their own workforce strategies in response to evolving market conditions and technological advancements.
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