Tata Consultancy Services (TCS), India’s largest IT services exporter, announced today its biggest layoff in company history—eliminating 12,261 positions, about 2% of its 613,000-strong global workforce. The move marks a watershed moment for the 55-year-old firm, signaling a strategic pivot from scale to skill as clients demand more specialized digital and AI-driven services.
However, there were widespread rumors on social media and various online platforms suggesting the actual number of layoffs was as high as 80,000. TCS has firmly denied these claims through multiple official statements, calling such reports “incorrect and misleading.”
The company reiterated that the impact is limited to 2% of its workforce, not the much larger figures being circulated online. TCS stated that it remains focused on supporting impacted employees through reskilling initiatives, outplacement support, and appropriate severance benefits, and reaffirmed its commitment to building a future-ready organization amid ongoing global tech workforce changes.
1. Background and Rationale
Rapid Growth Meets Market Realities
Over the past two years, TCS saw headcount swell by nearly 10% as it onboarded projects across digital transformation, cloud migration, and e-commerce platforms. However, as client budgets tightened in Q4 FY25, project pipelines slowed. CEO K. Krithivasan told analysts,
“While our capacity expanded rapidly, market demand for legacy services plateaued. This realignment aims to match our workforce capabilities with strategic growth areas.”
Skill Mismatch vs. Automation
Contrary to speculation that AI and automation drove large-scale cuts, TCS insists the layoffs target skill mismatches. In a statement to Hindustan Times, Krithivasan clarified,
“We are not cutting roles because AI replaced them. We are redeploying resources where our delivery model requires advanced skills in AI, data analytics, and cybersecurity.”
2. Phased Implementation and Employee Support
Phased Notices
The layoffs will occur in three phases through FY26. Notices began rolling out on July 28, with final notifications expected by December 15. This staged approach aims to minimize operational disruption across TCS’s 149 delivery centers in 55 countries.
Severance and Reskilling Packages
TCS’s severance policy includes:
- Notice-period pay of up to three months
- Extended health and life insurance for six months
- Outplacement support including resume workshops and interview coaching
- Access to TCS Elevate, an internal reskilling portal offering 500+ courses in cloud, AI, and blockchain
According to Financial Express, over 200,000 employees have already enrolled in Elevate courses, suggesting many will upskill into new roles.
3. Government Oversight and Industry Implications
MeitY Monitoring
The Ministry of Electronics & IT (MeitY) is closely watching the layoffs. A spokesperson noted,
“We are engaging with TCS to ensure that impacted employees have access to government upskilling programs and that local economies dependent on TCS centers are supported.”
Sector-Wide Context
Indian IT firms collectively cut 40,000 jobs in Q1 FY25. Cognizant and Wipro announced cuts of 7,000 and 4,500 respectively. TCS’s larger headcount amplifies the economic impact, particularly in tech hubs such as Pune, Hyderabad, and Bengaluru.
4. Client and Market Reactions
Enterprise Client Concerns
Several Fortune 500 clients expressed unease, fearing project delays. A digital banking executive in Singapore told Business Today,
“Our multi-year engagement with TCS is critical for our cloud transition. Stability of delivery teams is a concern, but they’ve assured continuity.”
Investor Response
TCS shares fell 1.8% on the Bombay Stock Exchange following the announcement. Analysts at Morgan Stanley had projected cuts near 8,000, so the larger figure caught traders off-guard. However, IJ Morgan upgraded TCS to “Overweight,” citing improved margin outlook from a leaner cost structure.
5. Employee and Expert Voices
LinkedIn Outpouring
- Anita Sharma, a former project manager, posted:“After 7 years at TCS, I’m displaced. I’m grateful for reskilling support but worried about the job market. Upskilling won’t happen overnight.”
- Rakesh Singh, a cybersecurity architect, commented:“TCS is doing the right thing by focusing on future skills. Those who adapt will thrive; others will need government and industry support.”
Reddit Discussions
On r/consulting, users debated:
“Mid-level folks on old tech stacks are most vulnerable. TCS needs to accelerate its Elevate program to avoid mass exits.”
Industry Expert Analysis
- Phil Fersht, CEO of HFS Research:“TCS is reshaping its workforce for a digital-first world. This restructuring is about survival amid fierce competition from niche digital firms.”
- Nikhil Batra, partner at McKinsey India:“Skill-based layoffs are harsh but necessary. TCS must balance cost rationalization with culture and morale to retain top talent.”
6. Strategic Outlook
Rehiring in Growth Areas
TCS plans aggressive hiring in:
- AI and ML engineering
- Cloud architecture
- Cybersecurity
- Digital customer experience
Job listings for 8,000 positions in these domains opened simultaneously with layoff notices.
Long-Term Vision
Krithivasan reiterated TCS’s 10-year ambition: to double digital revenues and transform from a service provider to a product-centric innovator.
“Our goal is to be recognized as a leading AI-first services company, with 60% of revenues from digital and industry-specific platforms by 2030.”
TCS’s 12,261-job reduction underscores a pivotal industry shift—from volume-based services to specialized, digital-forward solutions. While the cuts bring short-term pain, the company’s focus on upskilling and targeted rehiring aims to position TCS for sustained leadership in the evolving global tech landscape.
