TCS Layoffs Signal AI's Growing Impact on IT Industry and Job Market

TCS: India's AI-driven tech firings could derail middle class dreams

India's showpiece software industry is facing a moment of reckoning. The country's biggest private sector employer Tata Consultancy Services (TCS) - also its largest IT services company - has announced it will cut more than 12,000 jobs at middle and senior management levels. This will reduce the firm's workforce by 2%. The Mumbai-headquartered software behemoth employs over half-a-million IT workers and is considered a bellwether for business sentiment across India's $283bn software industry. It forms the backbone of formal, white-collar employment in the country. The decision, TCS says, was taken to make the company "future ready" as it invests in new areas and deploys artificial intelligence at scale amid seismic disruptions in its traditional business model. Companies like TCS have, for decades, relied on cheap skilled labour to produce software for global clients at lower costs, but this has been upended by AI automating tasks and clients demanding more innovative solutions, rather than just cost savings on manpower. "A number of re-skilling and redeployment initiatives have been under way," TCS said in a statement, adding it will be "releasing associates from the organisation whose deployment may not be feasible". "Across IT companies, people managers are being let go while the doers are being kept to rationalise the workforce and bring in efficiencies," Neeti Sharma, CEO of staffing firm TeamLease Digital told the BBC. She added that "there's been a massive spike" in emerging tech hiring in areas such as AI, cloud, data security, but it is not at the same intensity at which people are being fired. TCS's announcement also highlights the sharp "skills mismatch" in the country's software industry, experts say. As generative AI leads to a rapid enhancement of productivity, "this technology shift is forcing businesses to reassess their workforce structure and analyse if resources should be redirected toward roles that complement AI capabilities," Rishi Shah, economist with Grant Thornton Bharat told the BBC. According to the industry body Nasscom, India needs a million AI professionals by 2026, but not even 20% of the country's IT professionals are AI-skilled. While up-skilling spends by tech companies have significantly spiked as they rush to prepare a new pool of AI talent for the future, those without the requisite skills are being shown the door.

TCS to cut roughly 12,000 jobs globally as AI investments deepen

The India-headquartered IT services firm employs more than 1,000 people in Ireland. Tata Consultancy Services (TCS) will be laying off around 2pc of its global workforce over the course of this year. The job cuts will affect roughly 12,000 middle and senior-level employees, the global IT services firm told news outlets said in a statement. TCS employs more than 1,000 people in Ireland across Dublin, Donegal, Cork, Galway and Athlone. While globally, the India-headquartered company employs more than 600,000 people. TCS did not clarify whether the layoffs will affect those employed in Ireland. In an interview with Moneycontrol on Sunday (27 July), TCS CEO K Krithivasan said, "The ways of working are changing", pointing to new artificial intelligence technologies. The company, like many others, has made heavy investments in AI. "We have been deploying AI at scale and evaluating skills we will be requiring for the future. We have invested a lot in associates in terms of how we can provide them with career growth and deployment opportunities. "Still, we find that there are roles where redeployment has not been effective," he added. TCS made more than $30bn in revenue in its last financial year ending 31 March 2025. The company said that AI and Generative AI projects are driving growth, with its clients increasingly seeking AI-led interventions. Last month, TCS announced a new partnership with Nvidia to design agentic AI solutions directed at its telecom customers. TCS has been in Ireland since 2001, and has grown its presence in the country over recent years. One of the biggest expansions for TCS Ireland came in 2020 when it acquired Donegal-based Pramerica. This paved the way for TCS to develop its global delivery centre in Letterkenny. In 2024, the company secured a major Government contract to manage a new pension auto-enrolment system. Don't miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic's digest of need-to-know sci-tech news.

TCS to 'Layoff 2% Workforce', Software Spend Down by $200 Mn Amidst AI Overhaul | AIM

The company stated that its employees have invested 15 million hours in developing expertise in emerging technologies to drive business transformation. The first quarter of FY26 was a challenging period for Indian IT giants, including TCS, Wipro, and HCLTech, with some reporting a drop in revenue and others recording single-digit growth. However, beyond the revenue figures, the focus on AI might be overshadowing the broader story of these firms. According to a report by Moneycontrol, TCS plans to reduce its workforce by 2% by 2026. This would impact 12,000 jobs primarily at the middle and senior levels. "It has not been an easy decision and one of the toughest decisions I have had to take as CEO," TCS CEO K Krithivasan said, while adding that AI is not the complete reason for the layoff. The company also mentioned that it is undergoing a significant overhaul, which includes strategic initiatives in new markets and the deployment of AI at scale for its clients. TCS attrition ticked up to 13.8% in Q1 FY 26 from 13.3% in the prior quarter. AI is finally catching up with India's 30-year-old IT business model, which has been primed for disruption ever since ChatGPT entered the scene. In the US, the impact has been swift, and several leading tech companies started layoffs late last year. Over 50,000 jobs have vanished this year as giants like Meta, IBM, and Microsoft have reduced their workforces, fueled by AI, cost-cutting measures, and the cancellation of Federal contracts. Besides the layoff, which is relatively small compared to its overall workforce of 6,13,069 employees, the company's significant drop in 'cost of equipment and software licences' expenditure, the narrative around GenAI and AI-led productivity gains suggests AI is in action. Typically, AI adoption increases software and infra costs due to GPU provisioning, LLM API usage, and onboarding of new development tools and platforms. But the software license expenses reduced from ₹2,748 crore in the previous quarter to just ₹726 crore now, according to TCS's latest quarterly financial statement. Queries sent by AIM to TCS regarding this notable decrease remained unanswered. However, during the earnings call, CFO Samir Seksaria clarified that the drop was due to a completed transformation deal, not AI. Read: AI Coding Could Be Indian IT Engineers' Biggest Threat The company's COO, Aarthi Subramanian, had earlier said that AI for modernisation is emerging as a strong theme. "GenAI is now becoming the tool to really understand the legacy code and use GenAI to convert and forward engineers to a modernised architecture and application," she had said. Subramanian added that productivity gains are visible in coding, but software is much more end-to-end, right from conceptualisation all the way to testing and delivery. However, the company attributes margin increases to deal closures and policy changes, not automation. Read: Indian IT 'Should Be Paranoid' About AI & Ditch its 30-Year-Old Business Model Also, TCS did not disclose any major wins related to generative AI this quarter, nor did it specify its GenAI revenues, despite revealing a $1.5 billion GenAI pipeline in Q1 FY25. But the company showcased new platforms, including SovereignSecure and DigiBOLT, both of which are positioned as scalable, AI-native frameworks. "We have already built agents, and many are in the roadmap," said Subramanian during the earnings call. "Clients are increasingly shifting their focus from use case-based approach to ROI-led scaling of AI." She added that agentic AI is becoming an integral part of all client conversations across various sectors, including BFSI and manufacturing. Subramanian further noted that the shift from experimentation to production has begun, and AI revenues have grown. Read: Indian IT's AI Revenue is Still 2-3 Years Away Meanwhile, addressing the talent acquisition and attrition, Milind Lakkad, the outgoing CHRO, said: "Talent Development is core to TCS. In this quarter, our associates invested 15 million hours in building expertise in emerging technologies, enabling them to lead the transformation journey for our customers." He added that over 114,000 employees are now equipped with 'higher-order AI skills'. The company did not quantify how this would translate to revenue, productivity, or delivery improvements. TCS also rolled out a more aggressive bench policy, mandating 225 billable days per year, with only 35 days of allowable non-billable time. The company attributed this to automation and client demand for faster, AI-led delivery. That's a subtle but telling shift: clients no longer want just headcount. They want outcomes delivered at AI speed. Krithivasan had said that TCS is "comfortable" with the deal volume in Q1. But comfort doesn't necessarily translate to confidence. "It could be too early to call out when growth will resume," he added.

TCS layoffs are a reminder that AI has crashed the tech party, and redirected the paychecks

As Tata Consultancy Services (TCS) prepares to lay off around 12,000 employees in the coming years, it marks another major shift in how artificial intelligence is redrawing the boundaries of work. TCS, long considered one of the most stable employers in Indian IT, is now aligning with a global trend: replacing roles in software development and IT support with AI-powered systems. This move reflects what a new report by labor market intelligence firm Lightcast confirms -- AI is driving job losses in tech, even as it fuels wage growth elsewhere. According to the report "Beyond the Buzz: Developing the AI Skills Employers Actually Need," roles requiring AI skills now pay 28% more on average, or nearly $18,000 extra per year. Also Read | Big tech, small cheques: A decade of déjà vu for India's IT freshers while CEO salaries soar TCS's announcement follows a wave of similar actions in the global tech industry. Microsoft is laying off 15,000 employees while investing $80 billion in AI. These cuts are concentrated in roles that are now seen as automatable -- software engineering, IT support, and routine back-office functions. The Lightcast report, based on over 1.3 billion job postings, shows that while tech job postings for AI skills remain high, their share of the overall AI job market is shrinking. In 2019, 61% of AI jobs were in IT and computer science. By 2024, that number dropped to 49%, with the majority of AI demand now emerging from non-tech sectors. The layoff at TCS signals what Lightcast calls "the cost of complacency." While traditional tech roles shrink, AI is not eliminating jobs across the board -- it's reallocating where opportunity lies. For TCS employees and others in the IT sector, the key may be to pivot toward roles that combine domain expertise with AI fluency. For those outside tech, the message is optimistic: AI skills are no longer a niche -- they are becoming a wage accelerator across industries. Also Read | India's AI talent gap widens as demand surges From marketing to HR, finance to education, companies are hiring workers who can blend human judgment with AI tools. Since 2022, demand for generative AI skills in non-tech roles has jumped 800%. Employers are looking for candidates who know how to use platforms like ChatGPT, Copilot, or DALL·E -- not just to automate tasks, but to create business value. "Customer service workers fluent in AI know how to interpret AI outputs, write clear prompts, and troubleshoot when things go off script. That combination of human judgment and AI fluency is hard to find and well worth the extra pay," Christina Inge, founder of Thoughtlight, told Fortune. Lightcast has introduced the AI Skills Disruption Matrix, a model that helps employers and educators prioritize which skills to build, retrain, or replace. It assesses skills based on growth rate, importance in the workforce, and exposure to AI automation. The goal: move beyond vague "AI literacy" to focus on real, in-demand competencies. "Companies that continue treating AI as a niche technical skill will find themselves competing for talent with organizations that have embedded AI literacy across their entire workforce. Educators who wait and see what impact AI will have will find that they've lost students and funding to other providers who include AI skills across programs -- not in place of other skills, but alongside them," Cole Napper, VP of Research and Insights at Lightcast, said. The report identifies five high-opportunity sectors: These sectors are seeing not just hiring growth -- but wage growth too. Workers who combine communication, leadership, and problem-solving with AI capabilities are commanding higher pay.

AI & jobs: Is your boss hiding something from you?

Amidst tech sector anxieties following TCS layoffs, experts and industry leaders are divided on AI's impact. While some, like Geoffrey Hinton, warn of downplayed risks and potential job displacement, others emphasize AI's role in augmenting tasks and creating new opportunities. After Tata Consultancy Services (TCS), India's largest IT employer, announced sacking of 12,000 people or 2% of its workforce of 600,000, fear has gripped employees in the tech sector while others too are anxious. Though TCS said its layoffs are not due to artificial intelligence (AI) but "skill mismatch", concerns rise over the threat of AI to jobs across sectors. As per analysts the TCS move may be adopted by other companies that are facing similar headwinds. India's IT services industry body Nasscom acknowledged that the industry is at an "inflection point" and expects some workforce rationalisation in the near term. This is due to the pivot toward product-aligned delivery models and the rising demand from global clients for greater agility, speed and innovation, it said in a statement on Tuesday. Nasscom said that the technology sector is undergoing a structural transformation as AI and automation become central to business operations, with implications for both service delivery and workforce models. However, Nasscom emphasised that technology continues to be a strong growth enabler. "Every wave of disruption brings new roles, new value chains, and new opportunities," it said, underscoring the need for continuous skilling, upskilling, and cross-skilling to build a future-ready and resilient workforce. Yet, the threat of AI to jobs can't be overstated as is evident from rising global anxiety on this issue among employees as well as experts. Also Read: Nasscom anticipates more layoffs across IT services industry in the near term Bosses in the tech sector could be downplaying the risk of AI to jobs. Geoffrey Hinton, the ex-Google employee known as the "Godfather of AI" for his work on neural networks, has been vocal about the risks of the technology. He said on a recent episode of the "One Decision" podcast that "most" people at tech companies understand the risks, but don't act on them. "Many of the people in big companies, I think, are downplaying the risk publicly," Hinton said on the episode, which aired on July 24, as reported by Business Insider. But he mentioned one tech leader who is attuned to the potential dangers of the technology. "Demis Hassabis, for example, really does understand the risks, and really wants to do something about it," he said. Hassabis is the CEO of Google DeepMind, the company's main AI lab. He co-founded DeepMind in 2010 and sold it to Google in 2014 for $650 million, under the caveat that the tech giant would create an AI ethics board. A Nobel Prize winner, Hassabis had for years hoped that academics and scientists would lead the AI scramble. Now, he's at the center of Google's push for AI dominance, and some company insiders previously told Business Insider they think he might be in the running for CEO. In February, Hassabis said that AI poses long-term risks and warned that agentic systems could get "out of control." He has pushed for having an international governing body to regulate the technology. Late last month, protesters demonstrated outside DeepMind's London office to demand more AI transparency. Recently, OpenAI CEO Sam Altman delivered a sobering reality check: AI is no longer just transforming the workplace; it's poised to replace swathes of it. Speaking at a recent Federal Reserve conference in Washington, Altman offered an unflinching assessment of how generative AI could reshape human labor, raising both practical concerns and existential questions. Also Read: TCS to freeze senior hiring, pause annual salary hikes A recent study by Pew Research Centre showed that the public and experts in the US are far apart in their enthusiasm and predictions for AI. Public optimism is low regarding AI's impact on work. While 73% of AI experts surveyed say AI will have a very or somewhat positive impact on how people do their jobs over the next 20 years, that share drops to 23% among US adults, the survey showed. 64% of the US public thinks AI will lead to fewer jobs over the next 20 years while far fewer experts (39%) surveyed say the same. Researchers at Anthropic -- the AI company behind Claude, one of the most popular AI assistants -- created a dataset to measure the possibilities, as per a Washington Post report. They looked into 1 million text-based conversations between users and Claude at the end of 2024 and categorized each conversation into either an augmentative or automated task. They then mapped these tasks to more than 700 distinct occupations based on work characteristics. The data show that, on average, AI (in this case, Claude) was already either automating or augmenting some 25 percent of the day-to-day tasks across all jobs by the end of 2024. AI affects different jobs in different ways. Some, such as programmers and translators, are at a higher risk of being automated by AI. Others, such as college professors, could be augmented, the Washington Post report says. Computer- and math-related jobs get the highest automation scores -- an average of 23 percent of tasks under this occupation group can be automated by AI. Meanwhile, educators and librarians get the highest augmentation scores -- 40 percent of their job tasks can be augmented by AI. However, what can assuage workers' anxieties to some extent is that AI presently does more augmentation than automation. For almost all jobs, the use of AI for augmentation -- for now -- remains much higher than that for automation, the Washington Post report says. This seems to indicate that AI could, at least in the short term, prove more useful than disastrous.

'Kitne aadmi the': CP Gurnani explains why TCS layoffs are a sign that the 'Sholay era' of IT companies is over

TCS's recent layoffs signal a shift in the Indian IT sector towards outcome-based models, as highlighted by CP Gurnani. While some jobs may be cut due to AI, new roles are emerging, requiring specialized skills. The industry faces concerns over employee well-being amid stricter bench policies and a slowdown in overall hiring. Tata Consultancy Services' (TCS) recent decision to lay off around 12,000 employees is being viewed by industry leaders as a sign of a major shift in how Indian IT firms operate. Former Tech Mahindra CEO CP Gurnani said the move signals the end of evaluating IT companies based on workforce size, calling for a stronger focus on outcome-based models driven by artificial intelligence (AI). Speaking to CNBC-TV18, IT veteran CP Gurnani said Indian IT firms will increasingly move away from being measured by employee numbers. "The focus on the Sholay dialogue 'Kitne aadmi the' or judging the Indian IT industry based on headcount -- that period will be over," Gurnani told CNBC-TV18. He added, "We will have to rewire ourselves to focus on output and outcome-based business models, outcome-based pricing, and more importantly what it does for business and customers, instead of looking at IT and systems in isolation." Addressing concerns over job losses, Gurnani noted that although some roles may be cut due to automation and AI integration, new types of jobs are also emerging. He pointed out that hiring in AI roles is already on the rise. "If you see the job openings at these companies, they have only increased since the previous year. This is because they need more AI engineers, more data scientists, prompt engineers and people who can collapse few functions of an organisation," he said. "There is no point of having an HR organisation. Ultimately, it will become how do I serve my employee. That means it is a data-centric organisation, with a human touch," Gurnani added. TCS recently confirmed that it would reduce its workforce by about 2%, affecting nearly 12,000 employees, over the course of 2025. The company cited changing technology demands, client expectations, and strategic realignment as key reasons for the move. The layoffs are expected to mainly impact employees in mid-level and senior roles across various business units. According to the company, the job cuts are part of its long-term plan to become more agile and focus on emerging areas like artificial intelligence, data science, cloud computing, and automation. Amid layoffs, TCS has also introduced a stricter deployment policy that limits bench time to 35 business days per year. Employees are now required to be billed for a minimum of 225 working days annually. Failing to meet these expectations may affect their salary progression, promotion prospects, and continued employment. During their time on the bench, employees must attend office and spend four to six hours daily on upskilling through internal and external learning platforms. The company has asked staff to take initiative and work closely with the Resource Management Group (RMG) to find project opportunities. The Nascent Information Technology Employees Senate (NITES) recently raised concerns over the pressure faced by employees under the revised bench policy. In a letter to the Union Labour Minister, the group described the policy as "inhumane" and said it was causing mental stress among skilled professionals who were temporarily without assignments. "Instead of support, they are met with suspicion, coercion, and threats," NITES president Harpreet Singh Saluja wrote in the letter. The organisation also accused TCS of withholding experience letters from those unable to secure new roles within the prescribed time. The layoffs come at a time when the overall hiring outlook in India's IT industry has weakened. Data from recent quarters shows that job additions at leading IT companies have dropped significantly. In the April-June 2025 quarter, the top six Indian IT firms added only 3,847 employees, compared to 13,935 in the previous quarter. With rising costs, automation, and global economic uncertainty, industry analysts expect more firms to adopt tighter workforce management strategies. As AI continues to replace repetitive tasks, companies are increasingly looking for employees with specialised skills in digital transformation, cybersecurity, and advanced analytics.

TCS layoffs 2025: Why India's biggest IT co is asking 12,000 techies to leave, who's at risk, and what severance package they will get

Tata Consultancy Services (TCS), the country's largest IT services firm, is laying off about 2% of its workforce, over 12,000 employees, during the course of 2025. The decision comes as the company adjusts to global business uncertainties and rapid changes brought by artificial intelligence (AI). TCS said the layoffs are part of its larger plan to become more future-ready and improve how it delivers technology services. It cited lower business demand and the impact of AI-led changes as key reasons behind the decision. The company stated, "TCS is on a journey to become a future-ready organisation... As part of this journey, we will also be releasing associates from the organisation whose deployment may not be feasible." The job cuts follow a broader trend in India's IT sector, which has seen a major slowdown in hiring. Between April and June 2025, the top six IT companies added only 3,847 employees -- down over 72% from the previous quarter, according to an ET report. The layoffs will mainly affect mid-level and senior employees. TCS clarified that the workforce reduction would happen gradually over the year and would not impact client service delivery. The company had 613,069 employees on its rolls at the end of June. TCS said it is providing multiple support measures to the employees who are being let go. These include full notice period payments, an additional severance package, extended insurance benefits, and outplacement assistance. "This transition is being planned with due care to ensure there is no impact on service delivery to our clients... We understand that this is a challenging time for our colleagues likely to be affected. We thank them for their service and we will be making all efforts to provide appropriate benefits, outplacement, counselling, and support as they transition to new opportunities," the company said. The company is also working on strategic shifts. These include deploying AI at scale, investing in new technologies, exploring new global markets, and updating its internal workforce model. TCS has also been running internal reskilling and redeployment programmes to adapt to these changes. The company recently introduced a new bench policy requiring employees to maintain 225 billable days annually, with only 35 days allowed without deployment -- a move that has led to employee concerns and legal complaints. India's software services industry, which employs millions and generates over $283 billion in revenue, is facing a shift as automation and AI tools start to replace traditional tech work. TCS's move marks one of the biggest workforce adjustments by any single company this year. Tata Consultancy Services (TCS) has introduced a revised deployment policy effective from June 12, 2025, which requires employees to be assigned billable work for a minimum of 225 business days each year. This effectively limits the time employees can remain on the bench -- without a project -- to 35 business days annually. As per internal communication, employees who remain unallocated for long durations may face negative impacts on their salary, future promotions, chances of international assignments, and even continued employment. The document states, "Long periods of remaining unallocated shall adversely impact associate compensation, career growth, avenues of overseas deployment in future, and continuity of employment with the organisation." TCS expects employees to actively look for project assignments during their bench time. Associates are directed to coordinate with the Resource Management Group (RMG) and explore opportunities available within the company. "In the event an associate is unallocated, it is the primary responsibility of the associate to proactively engage with the Unit/Regional RMG for seeking allocation and take initiative towards pursuing suitable opportunities provided by the organisation," the company stated. During the bench period, employees are required to spend four to six hours daily on upskilling through platforms such as iEvolve, Fresco Play, VLS, or LinkedIn Learning. TCS has also made in-office presence the default, limiting remote work for those not assigned to a project. While TCS has not disclosed specific numbers, industry estimates suggest that 15-18% of employees at large IT firms in India are typically on the bench at any given time. With a total workforce of over 613,000, the potential number of impacted employees at TCS could be substantial. Last week, the Nascent Information Technology Employees Senate (NITES) sent a formal request to Union Labour Minister Mansukh Mandaviya seeking intervention against the new policy. "These are not non-performing employees, but skilled professionals who find themselves temporarily without allocation... Instead of support, they are met with suspicion, coercion, and threats," said NITES president Harpreet Singh Saluja in the letter. The organisation accused TCS of pressuring benched employees with the threat of job loss and withholding experience certificates if they fail to secure a project within the defined time limits.

Nasscom anticipates more layoffs across IT services industry in the near term - The Economic Times

India's apex IT services industry body Nasscom acknowledged that the industry is at an "inflection point" and anticipates some level of workforce rationalisation in the near term. This is due to the pivot toward product-aligned delivery models and the rising demand from global clients for greater agility, speed, and innovation, it said in a statement on Tuesday. This comes after Tata Consultancy Services (TCS), the largest IT employer, announced that it will trim 2% of its global workforce and let go of 12,000 mid- and senior-level employees. Nasscom said that the technology sector is undergoing a structural transformation as artificial intelligence (AI) and automation become central to business operations, with implications for both service delivery and workforce models. "Traditional skillsets are being re-evaluated, and this may lead to some transitions," the industry body noted, adding that each enterprise will navigate this shift based on its own strategic needs. However, Nasscom emphasised that technology continues to be a strong growth enabler. "Every wave of disruption brings new roles, new value chains, and new opportunities," it said, underscoring the need for continuous skilling, upskilling, and cross-skilling to build a future-ready and resilient workforce. The sector has made notable progress in reskilling talent, said the statement. As of the fourth quarter of FY25, over 1.5 million professionals have been trained in AI and GenAI competencies across levels, it noted. Of these, more than 95,000 employees in large listed IT firms have undergone advanced certifications in areas such as AI-native cloud, embedded AI, and applied intelligence. As artificial intelligence takes centre stage, hiring patterns are also expected to shift, with a growing demand for specialised, deep-domain expertise, the statement said.

TCS shares in focus as company announces layoffs of over 12,000 employees

Shares of Tata Consultancy Services (TCS), India's largest IT exporter, are likely to be in focus on Monday after the company announced plans to lay off around 2% of its global workforce, or roughly over 12,000 employees, over the year. The move comes amid growing macroeconomic uncertainty and increasing AI-led disruptions impacting technology demand. As of the end of June 2025, TCS employed 613,069 people globally. In a statement, the company said the layoffs would primarily impact middle and senior grades and are part of TCS's larger journey to become a "future-ready organisation." The company added that the deployment of some associates may no longer be feasible under current market conditions. The company emphasized that the transition is being managed carefully to ensure continuity in client service. Affected employees will receive their full notice period compensation along with additional severance benefits. TCS also plans to provide insurance extensions, outplacement support, counseling, and transition assistance. The decision follows closely on the heels of legal complaints filed by several employees against TCS's recently modified "bench policy." The updated policy reportedly allows just 35 annual days for employees to remain unassigned before being subject to performance-related action, and it requires a minimum of 225 billable days annually. The broader IT industry has also shown signs of a slowdown. According to a previous report by ET, job additions across the top six Indian IT majors fell sharply by over 72% in the April-June quarter, with only 3,847 new hires compared to 13,935 in the preceding quarter. Despite the layoffs, TCS reaffirmed its commitment to long-term strategic initiatives, including investments in new-age technologies, entry into new markets, deployment of AI at scale, deeper partnerships, and the development of next-generation infrastructure. On Friday, TCS shares closed flat at Rs 3,134.35 on the BSE. Also read: NSDL IPO: Issue opens on July 30, here's what you need to know about GMP, issue details (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

TCS layoffs: A job scare is pulsing through India

TCS is set to lay off around 2% of its workforce due to skill mismatches and AI-led disruptions, highlighting India's broader jobs challenge. While AI raises job anxiety, a significant AI talent gap exists, hindering industry growth. Addressing this requires upskilling initiatives to enhance graduate employability and meet the rising demand for AI professionals. After thousands of tech jobs were cut in the US due to AI push, tech layoffs have now come to India. India's largest IT exporter and private-sector employer, Tata Consultancy Services (TCS), has decided to lay off around 2% of its workforce, or roughly over 12,000 employees, over the year as macro uncertainties and AI-led technology disruptions continue to hit business demand. However, TCS CEO K. Krithivasan has said in an interview that "AI giving some 20 percent productivity gains" is not the reason for the cuts. Instead, he cited a skill mismatch and lack of deployment feasibility for certain roles. While TCS layoffs reflect the trends in the IT industry, they have put India's larger jobs challenge in a sharp focus. Nearly a week ago, Reuters reported that the Indian government's unemployment data is inaccurate and masks the severity of joblessness and underemployment, based on a Reuters poll of independent economists, several of whom said the true jobless rate is around twice the official figure. Over 70% of independent economists polled over the last month, 37 of 50, said the official unemployment rate, at 5.6% in June, is inaccurate. In a Reuters survey last year most economists flagged chronic joblessness as the government's biggest challenge. However, the government said reliance of the Reuters report on expert opinions rather than verifiable data raises significant concerns about methodological rigour. The government said the article questioned the reliability of official estimates without referencing any independent, data-driven empirical analysis. The portrayal of a deteriorating employment scenario in India stands contradicted by robust, credible, and internationally accepted official data, it said. There is no disclosure about who these economists are, the basis of their selection, or whether they reflect a cross-section of independent, academic, public, or private sector analysts, it added. While there has been an ongoing debate over jobs generation in India, there is a larger consensus over the quality of Indian graduates which brings the issue of unemployability to the centre stage as well as the rising challenges such as AI and automation. Multiple studies have found that AI-related job anxiety in India is high. According to Microsoft's Work Trend Index 2023, 74% of Indian workers feared that AI could take their jobs. This concern is echoed in India's Economic Survey 2024-25, which states that the rapid pace of AI developments has significantly heightened worries about its disruptive effects on the labour market. However, at present, India struggles with a different AI challenge. Technology firms are grappling with a major shortage of AI-trained professionals, with only 15-20% of the workforce equipped with artificial intelligence skills. This talent gap has led to a noticeable change in hiring approaches across the industry. Whether it's large IT companies like HCLTech, digital engineering firms like Publicis Sapient, or AI startups such as StaqU, all report the same challenge: the current talent pool cannot keep up with the surging demand. "There just aren't that many people in the market with AI skills," Shefali Sharma Garg, chief people officer at Publicis Sapient told TOI recently. "Our approach is to hire agile talent who can evolve as AI matures. It's moving fast, and adaptability is key." A recent report by Bain & Company shows that AI job postings have increased by 21% annually since 2019, while salaries have gone up by 11%. However, the growth in skilled talent hasn't matched demand. By 2027, India's AI sector is expected to create 2.3 million jobs, but only 1.2 million professionals may be available -- leaving a gap to be addressed through upskilling and training. In India, AI job openings are expected to be 1.5 to 2 times the available talent pool by 2027. Saikat Banerjee, Partner and leader in Bain & Company's AI, Insights, and Solutions practice in India, said, "India has a unique opportunity to position itself as a global AI talent hub. However, by 2027, the job openings in AI are expected to be 1.5-2x of the talent availability. The challenge -- and opportunity -- lies in reskilling and upskilling a significant portion of the existing talent base on emerging technology tools and skillsets." He added, "The AI talent shortage is a significant challenge, but not invincible. Addressing it requires a fundamental shift in how businesses attract, develop, and retain AI talent. Companies need to move beyond traditional hiring approaches, prioritize continuous upskilling, and foster an innovation-driven ecosystem." But the impact of AI and automation on jobs in India remains a big concern. Amit Kapoor and Mohammad Saad of Institute for Competitiveness argue that the claim that "AI will take away jobs but also create new ones" masks a more complex reality. "While it is true that roles in AI engineering, maintenance, and data infrastructure will emerge, the implicit comfort in this assertion that AI will compensate for what it displaces overlooks deep socio-economic barriers that prevent many from benefiting equally," they wrote in ET last month. "Not all workers will have the means or opportunity to upskill or transition into these new roles. Factors such as affordability, lack of employers' training opportunities, lack of time due to work commitments, and lack of time due to family responsibilities can make reskilling infeasible or even impossible for large sections of the population. India's jobs challenge is less about employment opportunities and more about employability. As per the Mercer Mettl India's Graduate Skill Index 2025 report, only 42.6% of Indian graduates who apply for jobs are overall employable while 46.1% of Indian graduates are job-ready for AI & ML roles. A February 2025 Hero Vired-Guru Gobind Singh Indraprastha University study, 'Hero Skills of the Future - Vision 2030: Emerging Careers, Skills & Opportunities for Growth', found that 77% of Indian professionals feel inadequately skilled in technologies their employers consider essential. Large Indian companies and conglomerates with ambitious expansion plans in new business areas are faced with an acute shortage of skilled talent, which could potentially delay projects and impact growth strategies, top industry officials said, as per an August 2024 ET report. India is projected to confront a potential skill deficit of 30-32 million people by the end of fiscal 2025 and 47-49 million by 2027, according to data put together by Teamlease Degree Apprenticeship. The most impacted sectors include automobile, health, real estate, pharma, textile and construction. Sunrise sectors such as renewable energy (solar, wind and hydrogen), semiconductors, electronics manufacturing (drone making) and electric vehicles are staring at a manpower shortage of 2 million in the next two years, as per Teamlease data. Large companies such as Larsen & Toubro, Tata Motors, Shree Cement and Lumax are investing in training their blue-collar workforce with new age skills. In last year's budget, the government introduced the PM Internship Scheme which mandates the top 500 companies to provide internship opportunities to one crore youth over the next five years. It aims to provide young individuals with practical exposure to professional work environments. Under this scheme, selected interns will be placed in India's top 500 companies, gaining hands-on experience that enhances their career prospects. Each intern is entitled to a monthly stipend of Rs 5,000, with companies allowed to use CSR funds to cover a portion of this stipend and associated training costs. There is widespread support for expanding the Prime Minister's Internship Scheme 2024, with 81 percent of companies advocating for its extension to all corporates, said a TeamLease EdTech's January report "From Learning to Earning: The Role of CSR in Transforming Education into Employability". The report was based on insights from 932 companies. To face challenges from AI and automation, India not only needs to create more jobs but also skill its graduates better to enhance their employability.

Explained: Why TCS firing 12,000 employees may be a canary in the mine and what it means for investors

TCS's decision to lay off 12,000 employees due to macro uncertainties and AI disruptions has triggered investor concerns, contrasting sharply with Meta's layoff experience. This move reflects a weak demand environment and potential execution risks for the IT sector. Analysts warn of margin pressures and rising attrition, signaling a structural shift in India's IT services industry. When Mark Zuckerberg announced in November 2022 that Meta would slash its workforce by 13% and lay off around 13,000 employees, shareholders celebrated the cost-cutting exercise with double-digit stock gains in the following days. But Tata Consultancy Services' (TCS) decision to fire 12,000 workers tells a vastly different story, one that has investors running for the exits. India's largest IT exporter has decided to lay off roughly 2% of its workforce, or over 12,000 employees, as macro uncertainties and AI-led technology disruptions continue to pummel business demand. The announcement sent TCS shares tumbling up to 1.7% to a day's low of Rs 3,081.20 on BSE, adding to the stock's brutal 25% decline in calendar year 2025. The pain spread to peers like Infosys, which fell 2% during the day. Also Read | TCS shares slip nearly 2% after company announces over 12,000 layoffs The contrast with Meta's experience reveals the fundamental difference between TCS' situation and typical tech layoffs. While Meta was cutting excess hires during pandemic-era growth, TCS is grappling with demand-related issues. Jefferies delivered a stark warning about what TCS' workforce reduction really means: "TCS' move to cut 2% of its workforce may lead to execution slippages in the near-term and higher attrition in the longer-run for the firm and reflects a weak demand environment for the sector. With most deal wins being led by cost-optimisation initiatives and involving AI-led productivity pass-through, IT firms unable to gain share may have to resort to lay-offs." The Nifty IT index has become 2025's worst-performing sector, plunging 24% from its peak into bear market territory. This isn't just about one company's struggles; it's a sector-wide crisis that's reshaping how investors view India's once-celebrated IT services industry. Jefferies explained the broader implications: "Focus on cost-cutting may hurt TCS in longer-run... The move by TCS reflects its growing focus on conserving margins amid continued growth pressures and is the third such move in the past 3 months after deferral of wage hikes in Apr-25 and the benching guidelines introduced in Jun-25, which restricted the non-billable period of an employee to 35 days/year." The brokerage warned that despite TCS traditionally enjoying lower-than-industry attrition levels due to job stability, "the ongoing lay-offs will hurt employee morale and could potentially lead to execution slippages. In the longer run, such policies could drive a sharp rise in attrition, similar to what was seen at Cognizant during 2020-22." Also Read | TCS layoffs: IT major to mass fire 12,000 senior, mid-level staffers amid AI push What makes this downturn particularly concerning is its root cause: artificial intelligence is fundamentally changing how IT services work gets done. Jefferies noted that "with cost-optimisation being the key driver for new deal wins, clients are asking for productivity benefits -- a trend which is also growing due to the rise in AI adoption." This creates a vicious cycle where "IT firms do more work with the same number of employees (wallet share gains) or the same work with fewer employees. The 2nd scenario eventually leads to lay-offs as redeployment of bench takes longer when demand environment is weak." Elara downgraded TCS to Accumulate from Buy, cutting its target price to Rs 3,770 from Rs 3,970. The brokerage cited multiple headwinds: "discretionary spend continues to be under heightened scrutiny, the new tariff order is adding further pain to some sectors such as Pharma, spending in Energy has reduced due to policy changes and geopolitical tensions, and BFSI is subdued in Europe and the UK." Elara is building in modest recovery expectations: "We build in some recovery from FY27 and factor in ~3.5% growth in FY27E. We cut FY26E/27E EBIT margin estimates by 50/60bps, led by a rise in attrition and possible further pressure on margin due to the new BSNL deal." For investors, the message is clear: this isn't a temporary blip but a structural shift requiring careful stock selection. Jefferies advised: "Given the current demand uncertainties, earnings outlook for IT firms may remain subdued, due to which we remain selective on the sector." Among large caps, the brokerage favors Infosys and HCLTech, noting that HCL "has emerged as a strong alternative to TCS given that it trades at similar PE multiples despite stronger growth outlook and similar FCF conversion." For mid-caps, Coforge and Mphasis get the nod "given their stronger growth outlook." TCS' layoffs aren't just about one company managing costs, but a canary in the coal mine for India's IT services industry, as Jefferies puts it.

Tech industry at an inflection point, workforce rationalisation expected in near term: Nasscom - The Economic Times

Tata Consultancy Services (TCS) has said it will lay off more than 12,000 employees, or 2 per cent of its global workforce, this year, as part of a broader strategy to become a "future-ready organisation". The impact will be felt most in the middle and senior grades.With country's largest IT services firm TCS laying off over 12,000 employees, industry body Nasscom on Monday said some "transitions" and "workforce rationalisation" are expected in near term as organisations shift toward product-aligned delivery models in response to increasing client demands for agility, innovation, and speed. Tata Consultancy Services (TCS) has said it will lay off more than 12,000 employees, or 2 per cent of its global workforce, this year, as part of a broader strategy to become a "future-ready organisation". The impact will be felt most in the middle and senior grades. Without directly mentioning TCS, Nasscom, in a statement titled "workforce realignment and industry transformation", highlighted that the tech industry is currently at an inflection point, with AI and automation becoming central to business operations. "Over the next several months, we anticipate some transitions as organisations pivot toward product-aligned delivery models, driven by rising client expectations around agility, innovation, and speed. This shift is likely to reshape traditional service delivery frameworks and, in the near term, may lead to some workforce rationalisation as traditional skillsets are re-evaluated," Nasscom said. Looking ahead, technology will continue to serve as a powerful catalyst for growth, making continuous skilling, upskilling, and cross-skilling, vital to developing future-ready and resilient workforces. Nasscom emphasised that deeper collaborations among industry, academia, and government is essential to bridge the skilling gap and embed talent development, which will sustain India's leadership in the AI era. As of Q4 FY25, more than 1.5 million professionals have been trained in AI and GenAI skills across different levels. Notably, advanced AI skilling initiatives have reached over 95,000 employees in leading listed firms, covering AI-native cloud, embedded AI, and applied intelligence certifications. "Hiring trends will continue to evolve, with increasing demand for deep, specialised expertise. There is no one-size-fits-all solution each enterprise will navigate this transition based on its unique strategic needs," NASSCOM said.

TCS Plans to Cut 12000 Jobs Amid AI Adoption

The company had added around 5,000 people during the first quarter, making the upcoming layoffs one of the most significant realignments in its history. Tata Consultancy Services (TCS), India's largest IT services company, is preparing to reduce its global workforce by around 12,000 employees during the current financial year. This planned reduction equivalent to nearly 2% of its overall headcount is being positioned as part of a broader strategy to modernize the company's delivery model and align its workforce with evolving client expectations in the AI and automation era. AI Adoption Drives Workforce Realignment While artificial intelligence (AI) is not cited as the sole reason for the layoffs, TCS has acknowledged that AI-driven efficiencies, coupled with the changing nature of technology services, have led to an increasing gap between existing employee skills and those in demand. The company is seeking to build a more agile, digitally focused workforce to support next-generation solutions for global clients. Mid-Level Executives Face the Brunt Most of the job reductions are expected to affect mid to senior-level employees. These roles are often harder to retrain or redeploy, and are more costly to retain if not immediately billable. In contrast, entry-level employees and fresh recruits will largely remain unaffected, as the company continues to invest in campus hiring and early-career development programs. As of June 30, 2025, TCS reported a global workforce of over 613,000 employees. The company had added around 5,000 people during the first quarter, making the upcoming layoffs one of the most significant realignments in its history. Focus on Redeployment and Support TCS has emphasized that it is taking steps to manage the transition humanely. Affected employees will be provided with severance packages, extended benefits, and outplacement assistance. The company also reiterated its commitment to reskilling initiatives and internal redeployment efforts wherever feasible. Industry-Wide Implications TCS's announcement reflects a larger trend across the global tech industry, where companies are increasingly using AI to streamline operations and reduce dependency on manual processes. With client expectations evolving and pricing pressures intensifying, particularly from major international markets like the US and Europe, IT service providers are being forced to re-examine their cost structures and workforce models. This development marks a significant moment for the Indian IT sector. TCS, long regarded as a benchmark for job stability in the industry, is now leading a shift that many peers are likely to follow. For thousands of professionals, the message is clear: the future of IT lies in adaptability, continuous learning, and alignment with digital transformation. As TCS navigates its next phase of growth, the success of its AI strategy and its ability to reskill and retain talent will be closely watched across the industry.

Are TCS Layoffs the First Wave? Experts See More IT Jobs at Risk

TCS had just laid off over 12,000 employees. Performance issues and project delays were cited as key reasons for this TCS layoff. However, industry experts say that a bigger issue is at play: with the slowdown in the global economy, automation, and a reduction in client spending, the entire IT sector is feeling pressure. Over the past year, many projects in the US and have been scaled back. These two regions are crucial markets for Indian IT firms. When businesses in these areas reduce their budgets, Indian IT companies are adversely affected. Currently, clients are being cautious and seeking better results at lower costs. "Global uncertainty is forcing clients to delay or cancel projects," said a senior IT analyst. "This reduces the need for large teams. Companies are trying to do more with less." Another significant factor is automation. From this perspective, computer-based tools such as AI and machine learning replace jobs that were once performed manually by humans. The fiercest blows are felt at the mid-level and entry-level jobs. Data entry, testing, and backend support are being increasingly automated. TCS is not alone in reducing its workforce. Infosys, WIPRO, and Tech Mahindra, among others, have all slowed hiring. Some are strictly reviewing their employees' worth. Industry sources indicate that are already occurring in smaller batches across multiple firms. The pandemic triggered an exceptional growth phase for IT hiring, with a massive demand for remote work and digital projects. The phenomenal growth phase is gone. Companies hired heavily during 2021 and 2022 and are now struggling to manage the inflated payrolls. "There was over-hiring during the pandemic. The demand has now dropped, but the workforce size didn't adjust quickly," says an HR consultant. "Layoffs are a way to fix that." The fresh graduates feel all the heat. Many wait to be onboarded after being offered jobs last year. Some have even had their offers postponed or withdrawn, and company training programs have also been downsized.

Indian tech company TCS to cut workforce by 2%, affecting more than 12,000 jobs

BENGALURU (Reuters) -India's largest IT services provider Tata Consultancy Services will reduce its workforce by 2% in its 2026 financial year, primarily affecting middle and senior management, the company said on Sunday. The move will eliminate roughly 12,200 jobs from the company's workforce of more than 613,000 as TCS deploys AI and other technologies while entering new markets and contending with an uncertain demand outlook. "This transition is being planned with due care to ensure there is no impact on service delivery to our clients," the company's statement said. India's $283 billion IT sector has had to contend with clients holding back non-essential technology spending because of weak demand, persistent inflation and lingering uncertainty over U.S. trade policies. TCS Chief Executive K Krithivasan said this month that there were delays in client decision-making and project starts. Phil Fersht, CEO of IT advisory firm HFS Research, said that the impact of AI is eating into the people-heavy services model in the sector. "(That model) is forcing large service providers such as TCS to rebalance their workforces to maintain profit margins and stay price-competitive in a cut-throat market where clients are demanding 20-30% price reductions," Fersht said. The decision by TCS, considering its culture of being a stable place to work, highlights this sectoral trend, he added. (Reporting by Haripriya SureshEditing by David Goodman)