India’s largest IT services company, Tata Consultancy Services (TCS), has announced it will lay off approximately 12,261 employees—or 2% of its global workforce—during the financial year 2025–26. The announcement, though framed as part of a long-term transformation strategy, has ignited debate around the growing role of artificial intelligence (AI) in reshaping the Indian IT landscape.
🚨 Key Highlights:
- Total layoffs: ~12,261 employees (2% of workforce)
- Impacted roles: Primarily senior and mid-level employees
- Reason: Skill mismatch, deployment challenges — not AI productivity gains
- Timeline: Gradual execution over FY26
- Geography: Global, not limited to India
- Strategy: Reskilling, AI deployment, cost optimization
🤖 AI or Not? TCS CEO Clears the Air
In an exclusive interview with MoneyControl, TCS CEO K Krithivasan dismissed speculation that the mass layoffs were a direct result of AI replacing human roles.
“This is not because of AI giving some 20% productivity gains,” he said.
“This is driven by where there is a skill mismatch or where we think we have not been able to deploy someone effectively.”
Krithivasan further labeled the layoffs as a “hard but necessary reckoning” as TCS evolves into a “Future-Ready” organization.
📈 The Bigger Picture: AI Is Still a Factor
While the CEO downplayed AI’s direct role, industry experts paint a more nuanced picture.
Phil Fersht, CEO of HFS Research, believes AI is gradually undermining the traditional, people-heavy IT services model, forcing companies like TCS to rebalance workforce composition.
“AI is eating into the services model… clients now demand 20-30% cost reductions on contracts,” he told Hindustan Times.
Fersht predicts this trend will continue for the next 12 months as IT giants upskill junior employees and phase out staff unable to adapt to the new “services-as-software” paradigm.
🧠 Strategic Shift: From Workforce to Workflows
TCS is doubling down on:
- AI deployment at scale
- Cloud and new-age technologies
- Deeper strategic partnerships
- Next-gen IT infrastructure
- Global market expansion
The company is also pushing reskilling and redeployment initiatives internally, but some roles—particularly in legacy technologies or with long bench periods—are being phased out.
👥 Who’s Impacted?
This round of job cuts primarily affects:
- Senior and mid-level managers
- Employees with over 10+ years of tenure
- Legacy tech professionals
- Staff on prolonged “bench” (unassigned)
Krithivasan confirmed the layoffs will not be region-specific and would be executed with “compassion,” including severance packages and career support services.
📊 Industry Implications
TCS’s move comes just weeks after HCL Technologies also flagged possible job cuts due to automation. With the rise of generative AI tools like ChatGPT, the traditional “body-shop” model of Indian IT services is under strain.
Expect more Indian IT firms to:
- Pivot to leaner, AI-enabled operating models
- Automate routine coding and support tasks
- Retrain staff to align with high-demand AI and cloud roles
📝 Final Thoughts
While AI isn’t the sole reason behind TCS’s decision, it undeniably accelerates the urgency for change. The tech world is shifting, and companies—and their people—must evolve with it.
For TCS, these layoffs are not an end but a recalibration toward the future. For employees, it’s a call to reskill, adapt, and engage with the AI-powered era of IT.
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