Unprecedented Layoffs at Tata Consultancy Services
India’s largest IT services firm, Tata Consultancy Services (
TCS), has announced plans to lay off nearly 12,200 employees—about 2% of its global workforce. This move marks the biggest round of layoffs in the Indian IT industry, primarily impacting mid- and senior-level professionals[1][2][4][5]. TCS reported a total employee count of 613,069 as of June 2025[4].
Driving Factors: AI and Economic Headwinds
TCS cited macroeconomic pressures and rapid disruption from AI technologies as the principal reasons for the reduction. The outsourcing industry—which generates annual revenues of over $283 billion—is witnessing a paradigm shift as companies streamline operations to invest in new tech, including widescale deployment of AI systems for both clients and internal processes[1][4].
- AI-driven automation is reducing the need for traditional IT roles.
- Cost-cutting measures are helping fund large-scale AI implementation.
- Ongoing economic uncertainty is dampening demand for legacy IT services.
AI Tools and New Technologies at the Forefront
TCS is investing heavily in advanced AI platforms, entering new markets and deepening partnerships to forge a “future-ready” approach[4]. The company’s strategy includes skilling and redeploying remaining staff to adapt to new workforce realities shaped by AI technologies such as
ChatGPT and other automation tools.
Impact on Employees: Severance, Policies, and Pushback
The layoff announcement has led to significant employee unrest. Reports indicate that some affected staff faced coercion to resign, being offered incentives like three months' pay, with the threat of termination without compensation if they refused[3]. TCS has acknowledged the situation publicly, stating that laid-off employees will receive severance, insurance, and outplacement support[2].
The company also revised its bench policy, now limiting non-project days to 35 annually and requiring 225 billable days per year[2]. These changes have left over 650 lateral hires in limbo as onboarding delays persist[2].
Industry Outlook: Slowing Hiring and Future Workforce Reshaping
Sector-wide, hiring sentiment remains subdued. Major Indian IT firms recorded a 72% drop in workforce expansion in Q2 FY26, reflecting more cautious hiring[1]. TCS frames the layoffs as part of a broader shift to re-skill employees, redeploy teams, and invest in next-generation digital infrastructure, with AI at its center[4].
Conclusion: A Sector in Flux
TCS’s sweeping layoffs and accelerated AI adoption signal a transformative moment for India’s IT sector. As companies like TCS pivot towards automation and digital solutions, workforce models and employee expectations are poised for rapid change.
