In its largest-ever workforce reduction, Tata Consultancy Services (TCS), India’s top IT services firm and the most profitable unit of the Tata Group, is set to lay off 12,261 employees, around 2% of its total workforce. This decision is driven by disruptions brought on by AI advancements and ongoing macroeconomic challenges that have impacted business demand.
As of June 2025, TCS employed over 610,000 people globally. The company has been continuously realigning its workforce in response to shifting business needs. In FY15, it reduced its staff by over 3,000, or about 1% of its total workforce. The upcoming layoffs will largely affect mid-level and senior employees. This move represents a significant strategic pivot for the company, embracing AI while shedding employees who are unable to be redeployed within the organization.
Such workforce reductions, which were once uncommon in the industry, highlight the growing pressure on businesses due to weaker demand, especially with the absence of large contracts like BSNL. Industry experts believe this could signal a wider trend in the sector, where increased automation and the need to protect profit margins are compelling companies to cut down on headcount.
In a statement to Moneycontrol, TCS CEO K. Krithivasan explained, “We anticipate it will be around 2% of our global workforce, mostly in middle and senior management. These employees may need to go because their roles are no longer viable. It’s a tough decision we had to make.” He also emphasized that the layoffs were not driven by margin pressures, adding, “Once it’s clear, CFO Samir Seksaria will address the financial impact, but this is not about margins.” According to Krithivasan, the job cuts are due to skill mismatches and the inability to deploy certain employees effectively, rather than a result of AI-driven productivity gains. He reassured that TCS would continue to recruit and train high-quality talent.
The announcement, however, has been met with criticism, especially on social media, where users have accused the company of hypocrisy, questioning why it was not anticipated sooner and criticizing the attempt to downplay the situation as a necessary cost-saving measure.
One netizen stated, “Politicians telling it is not for power and Executives telling it is not for margin –same:)”
Politicians telling it is not for power and Executives telling it is not for margin –same:)))) @chandrarsrikant RTl https://t.co/TQYpQOqJR0
— RVAIDYA2000 🕉️ (@rvaidya2000) July 27, 2025
Another netizen commented, “Someone spoke the truth. Every other big tech companies blame AI for taking away jobs. No its not. They just layoff people and save cost.”
Someone spoke the truth. Every other big tech companies blame AI for taking away jobs. No its not. They just layoff people and save cost.
— Sowmya (@ButterVennai) July 28, 2025
Another asked, “Suddenly the mid and senior level talent became Skill mismatch? How did they become Senior Talents without Skills? It is bcoz of changing Tech landscape and AI driven productivity increase. TCS isn’t telling the truth.”
Suddenly the mid and senior level talent became Skill mismatch? How did they become Senior Talents without Skills? It is bcoz of changing Tech landscape and AI driven productivity increase. TCS isn't telling the truth. https://t.co/8ijxkfqkCv
— Amit Dahal (@AmitDahal) July 27, 2025
The news of TCS laying off 12,261 employees, or around 2% of its workforce, could lead to a temporary drop in share prices as market sentiment reacts. However, the cost savings from these cuts might boost profit margins in the long run, especially as the company adapts to AI-driven changes.
Phil Fersht, CEO of HfS Research, echoed these sentiments, noting that AI is reshaping the labor-intensive services model, compelling large firms to restructure their workforce in order to stay competitive and meet client demands for significant price reductions—sometimes as much as 20-30%. Other Tata Group companies, like Tata Steel and Tata Motors, have also been periodically trimming their workforce to reduce costs and boost profitability. For example, in 2019, Tata Steel laid off 3,000 workers in its European operations.
(With inputs from Money Control)
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