TLDR: Tata Consultancy Services (TCS) has announced a substantial workforce reduction, impacting approximately 12,000 to 20,000 employees, or about 2% of its global workforce, in 2025. This strategic realignment is primarily driven by the company’s pivot towards AI, automation, and advanced digital services, leading to a ‘skill and capability mismatch’ among mid- and senior-level staff. The move signals a broader transformation within the Indian IT sector, emphasizing future-ready skills over traditional manpower.
In a significant strategic overhaul, Tata Consultancy Services (TCS), India’s largest IT exporter, has undertaken its steepest-ever workforce reduction in 2025, impacting an estimated 12,000 to nearly 20,000 employees. This represents approximately 2% of its global workforce and marks a pivotal shift in the company’s operational model. The restructuring is a direct response to the accelerating influence of artificial intelligence (AI), automation, and evolving client demands in the digital economy.
The layoffs primarily target mid- and senior-level employees, a demographic identified with a ‘skill and capability mismatch’ in the rapidly changing technological landscape. TCS Chief Human Resources Officer Sudeep Kunnumal stated that the company is roughly halfway through its plan to reduce 2% of its global workforce by March 2026. This initiative aligns with TCS’s broader strategy to focus on AI and automation-led services, emphasizing technology-driven efficiency over traditional manpower.
The company has allocated a substantial Rs 11.35 billion to cover severance-related costs, reflecting the scale of the restructuring. While social media rumors initially suggested a larger number of layoffs, TCS officially confirmed the impact on around 12,000 employees, clarifying that the reports of higher figures were incorrect and misleading.
This transformation is not merely about cost-cutting but about reshaping the company to meet the demands of next-gen technologies. TCS is actively shifting its focus towards areas such as cloud computing, AI-based enterprise solutions, data engineering, cybersecurity, and automation and low-code platforms. The company emphasizes that the workforce needs new skills, as some existing roles no longer align with upcoming demands.
Critics and analysts, such as those at Citi, note that these layoffs also reflect a cautious business outlook, pointing to slowing global demand and tighter IT budgets. External pressures, including proposed increases in H-1B visa fees by the US President and potential tariffs on Indian imports, have added to the uncertainty for India’s IT majors, impacting IT spending from American clients who constitute a significant portion of TCS’s revenue.
In response to the evolving environment, TCS has also updated its internal policies. Employees are now expected to maintain 225 billable days per year and cannot be on the ‘bench’ (not actively working on projects) for more than 35 days annually. Failure to meet these targets could lead to disciplinary action, including termination. This signals a move away from the traditional ‘bench strength’ model that characterized Indian IT for decades, towards a leaner, more agile, and skill-focused workforce.
Severance packages are being offered to impacted employees, with long-serving individuals (over 15 years of tenure) potentially receiving up to two years’ salary, along with career transition support and early retirement options. Employees on the bench for extended periods typically receive a simpler package, including three months’ notice or pay.
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- HDFC Bank CEO Assures No AI-Related Layoffs, Foresees Workforce Redeployment
- NASSCOM President Rajesh Nambiar Affirms India’s Tech Sector Resilience and ‘AI-First’ Future Amidst Global Shifts
The debate continues on whether AI is ‘replacing’ jobs or ‘transforming’ them. TCS leadership maintains that AI is not directly replacing jobs but rather necessitating a shift in skillsets, removing repetitive tasks, and creating demand for high-skill, strategic roles. This unprecedented move by TCS is seen as a strong indicator of a wider transformation across India’s IT industry, moving from labor-intensive outsourcing to smarter, tech-driven operations that prioritize innovation and specialized expertise.
