Tata Consultancy Services (TCS) has announced its intention to lay off 12,000 employees —around 2% of its total workforce. According to a statement released by the company, the layoffs will impact middle to senior level employees.
TCS said in a statement on Sunday that these job cuts were part of the company’s broader strategy to become a “future-ready organization,” focusing on investments in technology, AI deployment, market expansion, and workforce realignment. “Towards this, a number of reskilling and redeployment initiatives have been underway. As part of this journey, we will also be releasing associates from the organization whose deployment may not be feasible. This will impact about 2 per cent of our global workforce, primarily in the middle and the senior grades, over the course of the year,” the company said.
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According to a report by Mint, hundreds of employees have already been asked to leave. The layoffs actually began in the first half of July with employees in the 24-55 age group from Bengaluru, London and Princeton. “People in the bench with WFO (work from office) index issues are also getting released by the system, and have been asked to go,” a source told Mint.
The Mint also claims that business heads of TCS have been asked to send in a list of employees whom the company can consider for the pink slips. While a third of employees to be laid off in the coming months are from the benched section, the remaining will be let go based on this list.
CEO K. Krithivasan has said that the firings are not due to AI but a skill mismatch. “This is not because of AI giving some 20 per cent productivity gains. This is driven by where there is a skill mismatch or where we think we have not been able to deploy someone,” he said.
However, not everyone is convinced that AI hasn’t played a role. Rishi Shah, economist with Grant Thornton Bharat told BBC News that as generative AI leads to a rapid enhancement of productivity, “this technology shift is forcing businesses to reassess their workforce structure and analyze if resources should be redirected toward roles that complement AI capabilities.”
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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 tech companies have intensified their upskilling efforts, those without necessary skills are often asked to leave.
Besides the structural shifts brought about by the advent of AI, TCS’ announcement also “reflects the broader growth challenges being faced by India’s IT sector,” according to global investment banking firm Jeffries. U.S-based demand for IT services have also been impacted by President Donald Trump’s tariffs. While tariffs chiefly target physical goods, analysts say companies are pausing on discretionary IT spending as they reconsider the economic impact of tariff uncertainties and their global sourcing strategies.