Tata Consultancy Services, India’s largest IT services company, announced on July 27, 2025 that it would lay off roughly 2 percent of its workforce, affecting around 12,000 employees—mainly mid‑level and senior executives across its global operations. As of June 2025, TCS employed over 613,000 people worldwide.
The cuts will be phased through fiscal year 2026 (April 2025–March 2026) and span geographies and business domains, with no single area singled out.
What the Leadership Says
In its internal memo, TCS framed the move as part of a broader transformation to become a “future‑ready organisation”, citing investments in AI, cloud, cybersecurity, AI‑scale deployments, and workforce realignment.
CEO and MD K. Krithivasan stressed this is not about AI-driven productivity gains. In an interview with Moneycontrol, he said:
“This is not because of AI giving some 20 percent productivity gains. We are not doing that. This is driven by where there is a skill mismatch or where we think we have not been able to deploy someone.”
He added that TCS has trained more than 550,000 associates in foundational and advanced skills—but senior-level members sometimes can’t be deployed effectively despite the training. The process, he said, will be “phased and compassionate,” with notice pay, severance packages, health insurance, counselling, and outplacement support for those affected, according to The Financial Express.
Behind the Headlines: Why Now?
Since 2020, TCS grew headcount by 36 percent, while revenue per employee rose by 20 percent, and employee costs increased by 25 percent. Analysts estimate the layoff could cut costs by about 4 percent, or 12 percent of net profits for the fiscal year ending March 2025, according to Reuters.
Phil Fersht of HFS Research noted in Reuters: the rise of AI is reshaping outsourcing models and pushing firms like TCS to restructure. And Deepak Kumar, of BMNxxt Advisory, told Fierce Wireless that the shift is “strategic and structural,” reflecting a move away from the traditional pyramid workforce towards a product-centric, AI-enabled model.
Voices from Inside and Outside
While TCS didn’t publish names, internal memos and social media provide glimpses into employee sentiment.
One employee, quoted anonymously by The Financial Express, said:
“They are removing all the people who have been on the bench for more than 2 months.”
Across platforms like X (formerly Twitter), employees and observers wrote:
“If you’re 45 or approaching that age, surviving in the IT industry becomes increasingly difficult. You could be shown the door at any time.” — Economic Times
Another added:
“Read what TCS said: middle and senior management positions. These guys are not on bench. TCS wants to cut costs and they will save max from those positions, not a guy on bench.” — Hindustan Times
These voices reflect deep anxiety among those in middle layers, especially those transitioning into non-billable roles.
Wider Fallout: Unions, Government, and Public Debate
Unions and government bodies have raised concerns. The Karnataka State IT/ITeS Employees Union and FITE advised staff to not resign under pressure, and questioned whether TCS had complied with legal requirements like notice, compensation, and mandatory retrenchment filings. They deem the move potentially illegal and exploitative, according to Times of India.
The Ministry of Electronics & IT is reportedly monitoring developments closely, seeking clarity from TCS on the decision-making process, Times of India further reported.
The Executive Paybacklash
Amid layoffs, TCS CEO K. Krithivasan’s pay—₹26.52 crore in FY 25—became a flashpoint. His remuneration included ₹1.39 crore base salary, ₹2.13 crore in benefits, and a ₹23 crore commission—about 330x the median TCS salary, according to Economic Times.
Social media erupted in response.
One critic, quoted in Economic Times, wrote:
“Their lives won’t be terrible at ₹2.5 crore pay vs ₹3 crore. For 12,000 families, lives will be miserable at zero pay vs ₹15 lacs.”
Others countered with perspectives like:
“This is one of the stupidest comparisons… they are cutting jobs because there is an oversupply… Not to save money… the CEO gets paid because he has a job… the employee lost the job because there is no work to be done.” — Hindustan Times
The debate echoes broader concerns about executive-compensation fairness during restructuring events.
What This Means Going Forward
- Industry signal: TCS is breaking its long-held image of stability. This could influence competitors and redefine norms across India’s $283B IT sector.
- Talent must adapt: Nasscom estimates India needs 1 million AI-skilled professionals by 2026—but less than 20% of IT workers currently qualify, as reported by American Bazaar Online.
- Workforce model shifting: Analysts describe a move from pyramid-shaped staffing to a diamond shape, with fewer managers and more high-skilled specialists supporting AI-first client solutions, according to Reuters and LinkedIn News.
Final Thought
TCS’s mass layoff is no flash in the pan; it’s a structural pivot. The company aims to align its talent pipeline with a faster-changing, AI-driven world. It suggests a broader trend: Indian IT must transform—or face disruption.
For impacted employees, the journey ahead is hard. Offers of retraining and support are there—but the emotional toll remains. The broader ecosystem must reckon with this new reality: unless talent evolves, it risks being left behind.
