Introduction

Tata Consultancy Services (TCS), India’s largest IT services company, has announced plans to reduce its global workforce by approximately 2%, affecting over 12,000 employees in the financial year 2025-26. This decision, one of the largest workforce restructurings in TCS’s history, has sparked widespread concern and speculation across India’s tech sector. With TCS employing over 613,000 people globally as of June 2025, the layoffs primarily target mid- and senior-level professionals, raising questions about the future of IT jobs in India. This SEO-optimized article for MasalaMirror.com dives into the reasons behind the layoffs, their impact, and what lies ahead for TCS and its employees.

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Why Is TCS Cutting Over 12,000 Jobs?

TCS has framed the layoffs as a strategic move to make the company “more agile and future-ready” amid rapid technological shifts and global business uncertainties. CEO K. Krithivasan has emphasized that the job cuts are not driven by artificial intelligence (AI) efficiency gains but by skill mismatches and challenges in redeploying employees to new-age roles. The company is transitioning from traditional “waterfall” project management to agile, product-centric models, reducing the need for conventional project and program managers.

Key reasons for the layoffs include:

• Skill Mismatch: Many mid- and senior-level employees struggle to adapt to tech-heavy roles, despite TCS training over 550,000 employees in basic AI skills and 100,000 in advanced AI.
• Business Agility: TCS is restructuring to align with emerging technologies like AI, cloud, cybersecurity, and data analytics, necessitating a leaner workforce.
• Market Pressures: Lower demand for traditional IT services and the absence of large deals, like the BSNL contract, have pushed TCS to optimize costs.
• New Bench Policy: TCS’s revised policy, effective June 2025, limits employees to 35 days on the bench (without project deployment) annually, with consequences for salary, promotions, and continued employment.

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Who Is Affected by the TCS Layoffs?

The layoffs, impacting around 12,200 employees (2% of TCS’s global workforce), primarily target mid- and senior-level professionals, with some junior staff on extended bench time also affected. The cuts are not geography- or domain-specific and will roll out over the next three quarters of FY26 (ending March 2026). Employees in cities like Bengaluru, Mumbai, Chennai, Hyderabad, Pune, and Noida, where TCS has significant operations, are likely to be hit hardest.

The company’s new bench policy has drawn criticism, with reports of employees being pressured to resign or face termination without severance if they remain unallocated for over two months. Employee unions, such as the Karnataka State IT/ITeS Employees Union and the Forum for IT Employees (FITE), have called the layoffs “unlawful” and urged affected staff to resist forced resignations and seek legal recourse.

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TCS’s Support for Affected Employees

TCS has promised a “compassionate” and phased approach to the layoffs, offering:

• Full notice period compensation
• Attractive severance packages
• Extended health insurance benefits
• Outplacement services and job counseling
• Access to mental health counseling

CEO Krithivasan has assured that TCS will prioritize redeployment opportunities before finalizing terminations, with HR and business leaders engaging directly with affected employees. However, some workers have reported coercive tactics, including HR seizing phones and pressuring resignations, prompting unions to file grievances with labor authorities.

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Is AI Behind the Layoffs?

While Krithivasan has denied that AI-driven productivity gains are the primary cause, industry analysts argue that AI and automation are reshaping the IT landscape. Roles like manual testing are increasingly obsolete, and employees unable to transition to AI, cloud, or cybersecurity roles face higher risks. TCS’s investments in AI—training over 550,000 employees—highlight its focus on future technologies, but the layoffs suggest challenges in aligning existing talent with these demands.

The broader tech industry is witnessing similar trends. Microsoft cut 15,000 jobs in 2025, and Oracle laid off 10% of its India workforce, reflecting a shift toward AI-driven efficiency and cost optimization. Posts on X have linked these layoffs to an “AI wave,” with over 80,000 tech professionals laid off globally across 169 companies in 2025.

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Impact on India’s IT Sector

TCS’s layoffs signal a broader transformation in India’s $283 billion IT services industry, which employs millions. The sector is grappling with:

• Hiring Slowdown: Between April and June 2025, India’s top six IT firms added only 3,847 employees, a 72% drop from the previous quarter.
• Automation Shift: AI and automation are reducing demand for traditional roles, pushing companies to prioritize specialized skills.
• Policy Criticism: The Nascent Information Technology Employees Senate (NITES) has called TCS’s bench policy “exploitative,” accusing the company of threatening skilled workers with job loss.

The layoffs have also drawn attention from India’s IT Ministry, which is “closely monitoring” the situation, raising hopes for regulatory intervention. Social media reactions on X reflect public outrage, with users criticizing TCS’s leadership for prioritizing profits and executive compensation (CEO Krithivasan’s ₹26.5 crore package) over employee welfare.

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What’s Next for TCS and Its Employees?

Despite the layoffs, TCS reported a net headcount increase of 5,090 in Q1 FY25 and plans to honor all job offers for the year. The company is also rolling out salary hikes for 80% of its staff effective September 1, 2025, signaling confidence in its financial stability. However, its stock dropped 1.7% after the layoff announcement, reflecting investor concerns about execution risks and softer demand.

For affected employees, the layoffs pose immediate challenges:

• Job Market Competition: With thousands entering the job market, competition for IT roles in India will intensify.
• Upskilling Needs: Professionals must pivot to skills in AI, cloud computing, and cybersecurity to remain competitive.
• Union Advocacy: Employee unions are pushing for fair treatment and severance, with potential legal battles looming.

TCS’s restructuring is seen as a “canary in the coal mine” for India’s IT sector, signaling a shift from manpower-heavy models to leaner, skill-centric operations. As the industry evolves, employees and employers must adapt to survive.

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Conclusion

TCS’s decision to lay off over 12,000 employees in 2025 underscores the seismic shifts in India’s IT industry. While the company insists the cuts are about skill mismatches and agility, the influence of AI and automation looms large. For employees, the focus must shift to upskilling and adaptability, while TCS navigates the delicate balance of growth and compassion. As India’s tech landscape transforms, the TCS layoffs serve as a stark reminder of the challenges and opportunities ahead.

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