In what stands as its largest layoff to date, Tata Consultancy Services (TCS), one of India’s largest Information Technology (IT) services firms and the most profitable unit of the Tata Group, plans to cut 12,261 jobs, accounting for nearly 2% of its global workforce. The move comes amid growing disruptions caused by artificial intelligence (AI) and ongoing macroeconomic uncertainties that are impacting business demand.
As of June, TCS, chaired by N Chandrasekaran, employed over 6.1 lakh individuals worldwide. The company has previously undertaken workforce rationalisation in response to shifting business needs. Back in FY15, it trimmed over 3,000 roles, which accounted for about 1% of its headcount. The current round of layoffs will mainly target mid-level and senior professionals.
Such large-scale workforce reduction is rare in the Indian IT sector and highlights the challenging demand environment, particularly in the absence of major deals like the one with BSNL. Industry experts view this as an early indicator of a broader transition where automation, cost optimisation, and margin pressures are prompting companies to streamline operations.
TCS described the restructuring as a step towards becoming a "future-ready" organisation.
According to a report by The Times of India, TCS CEO K Krithivasan said in an internal email to employees: “This includes strategic initiatives on multiple fronts, and while these changes are necessary for our growth and evolution, we understand the impact on our colleagues. We thank them for their service and are committed to supporting them through this transition”.
Phil Fersht, CEO of HFS Research, noted that the rise of AI is disrupting traditional, labour-intensive service models. He added, “The impact of AI is eating into the people-heavy services model and forcing the large providers to rebalance their workforces to maintain their margins and stay price competitive in a cut-throat market where clients are demanding 20-30% price reductions on deals.”
Meanwhile, other Tata Group companies have also been optimising their workforce structures. Tata Steel, for instance, cut 3,000 jobs in its European operations in 2019, and Tata Motors has made similar moves over time to improve profitability and reduce costs.