Overview
- What happened? TCS plans to reduce its global headcount by roughly 12,000 employees—about 2% of its workforce—over FY 2026
- Target group: Mostly mid‑ and senior-level professionals, along with some junior staff on extended bench time
Why Now? What TCS Says
CEO K. Krithivasan emphasizes that:
- The layoffs are due to skill mismatches and deployment feasibility, not because AI drove productivity gains—despite industry speculation on ~20% AI efficiency
- Many employees trained in AI-related skills (over 5.5 lakh in basic AI and 1 lakh in advanced), but senior professionals struggled to transition to tech-heavy roles or Agile delivery models
- TCS is shifting from traditional waterfall staffing (with multiple leadership layers) toward a more agile, product-centric org structure; roles like project/program managers are being reduced
Employees & Public Reactions
- Social media erupted over TCS CEO’s ₹26.5 crore compensation, especially when paired with mass layoffs. Many questioned fairness and tone-deafness in corporate messaging
- Responses were mixed—some defending his role in leading a large firm, others alleging ethical contradictions in firing thousands while rewarding executives so heavily.
Support for Affected Employees
TCS promises:
- Severance pay and notice-period compensation
- Extended insurance coverage
- Mental health counselling
- Career coaching and outplacement assistance
- Reskilling support where feasible—but no guarantees of redeployment
Employees unions, including Karnataka IT/ITeS union (KITU), have filed grievances with labour authorities alleging unfair/illegal layoffs
Industry & Investor Reaction
- TCS stock dropped ~1.7% post-announcement, reflecting investor concerns about execution risk and softer demand outlook in IT services
- Analysts noted that TCS has a higher "headcount problem" than peers—its workforce grew almost 36% since 2020, outpacing revenue growth and inflating per-employee costs by ~25%
What It Means for the Future
1. AI & Automation Are Accelerating Industry Change
This isn't just TCS—it’s a signal that Indian IT is moving from manpower-heavy models toward efficiency, automation, and value-per-head output
2. The “Sholay Era” Is Over
As CP Gurnani (ex-Tech Mahindra CEO) stated, the era when IT's success was measured by headcount is ending. The focus is shifting to quality, innovation, and agility
3. Skills Are the Currency
Workers need to embrace AI, cloud, cybersecurity, data analytics—or risk becoming unemployable in legacy roles. Independent voices like Soham Parekh urge professionals to constantly learn and diversify their skill set
4. Peers Are Responding Differently
Infosys made headlines by continuing to hire and reskill without layoffs—signaling a different approach to transformation
What Employees Are Saying
- Reskilled employees: Grateful for training but frustrated at lack of deployment.
- Union statements: Job loss seen as avoidable and inhumane given TCS’s profit growth (~6%) and CEO pay level.
- Industry professionals: Some warn of domino effects at other firms; others see a vital reset toward more sustainable business models.
Summary Table
| Aspect | Commentary |
|---|---|
| Purpose of layoffs | Skill mismatch, Agile transition |
| Impacted Workforce | ~12,000, mostly mid/senior level |
| AI Role? | Officially not direct cause (20% productivity gain denied) |
| Employee support | Severance, insurance, counselling, reskilling |
| Industrial reaction | Union grievances filed, public backlash |
| Market impact | Shares dropped ~1‑2%; peer firms under pressure |
| Broader implication | Indian IT shifting to leaner, skill-centric models |
Final Thoughts
TCS’s 12,000 layoffs are more than a headline—they represent a seismic shift in Indian IT's operating model. While AI and automation are reshaping the ecosystem, the real driver here is the need for skills that match future demand and business agility.
For employees and employers alike, adapting quickly—and compassionately—will determine who survives and thrives.
References -