India’s largest IT services firm, Tata Consultancy Services (TCS), has announced a significant workforce reduction, declaring it will lay off 2% of global staff approximately 12,200 employees over the next fiscal year. The move is part of a sweeping transformation to make the organization leaner, more agile, and ready for rapid technological changes, especially in artificial intelligence (AI) and advanced digital services.
CEO K Krithivasan explained in interviews that while TCS has heavily invested in reskilling and offering internal career growth, some roles predominantly in middle and senior management could not be redeployed effectively amid ongoing changes in client needs, operating models, and technology. “We have been calling out new technologies, particularly AI, and operating model changes. The ways of working are changing. We need to be future-ready and agile,” Krithivasan stated.
The reduction comes as TCS, along with India’s broader $283billion IT sector, faces macroeconomic uncertainty, tightening tech budgets, and slower decision-making among key international clients. Market pressures and the shift toward AI-driven automation are reshaping demand for traditional roles especially those involving manual or legacy processes.
The impact will be primarily felt among experienced professionals in middle and senior grades, reflecting TCS’s intent to recalibrate its workforce toward emerging technology needs. Junior staff are expected to be largely unaffected, while affected associates will receive a comprehensive support package.
TCS says this transition is being executed with “due care to ensure there is no impact on service delivery to our clients.” Impacted employees will receive notice period pay, severance packages, extended health insurance, and access to outplacement services. The company also emphasized that the layoffs are not simply a result of AI replacing human workers, but rather a strategic move to align skills with future client and technology requirements.
This announcement arrives shortly after TCS reported positive first-quarter results, with net profits increasing but facing flat revenues due to subdued tech demand in traditional markets. The industry as a whole has seen slower hiring and increased pressure to drive efficiency, innovation, and productivity from existing teams.
TCS has also updated its HR policies to put more focus on project billability and shorter bench periods, further signaling a shift toward productivity and agile staffing models.
