TCS Layoffs Signal Industry Shake-Up: 12,000 Jobs to Go by FY26

India’s leading IT services company, Tata Consultancy Services (TCS), has announced plans to lay off approximately 12,000 employees, equating to around 2% of its global workforce.

This decision comes as part of a broader strategic shift aimed at making the organization “future-ready.”

As of June 30, 2025, TCS employed 6,13,069 people worldwide. Despite a recent hiring surge of 5,000 employees in the April-June quarter, the company is now undertaking a phased workforce reduction, primarily targeting middle and senior-level roles.

Reason Behind the Job Cuts

In a statement issued on Sunday, TCS clarified that the layoffs stem from a focus on technology investment, artificial intelligence deployment, market expansion, and a reassessment of workforce deployment.

The company stated, “Towards this, a number of reskilling and redeployment initiatives have been underway. As part of this journey, we will also be releasing associates from the organisation whose deployment may not be feasible. This will impact about 2 per cent of our global workforce, primarily in the middle and the senior grades, over the course of the year.”

CEO K Krithivasan emphasized that the layoffs are not AI-driven but are a result of skill mismatches.

“This is not because of AI giving some 20 per cent productivity gains. This is driven by where there is a skill mismatch or where we think we have not been able to deploy someone,” he said, assuring that the process would be handled “in a very, very compassionate way.”

Layoffs Already Underway

According to reports, hundreds of employees have already been asked to leave, with the process starting in the first half of July.

Affected individuals fall within the 24-55 age group, from locations including Bengaluru, London, and Princeton.

Some employees on the bench — those without active client projects — and with low “work from office” index scores have also been let go.

Business heads have reportedly been instructed to prepare lists of staff to be considered for release. One-third of those targeted are benched employees, while the rest are based on managerial evaluations.

Government and Market Reactions

The Ministry of IT is monitoring the developments closely and is in contact with the Tata Group. Sources indicate that the ministry will investigate the underlying causes that led to this large-scale decision.

Following the announcement, TCS shares declined for a second straight day, extending the 2% drop witnessed on Monday.

CEO Compensation Sparks Debate

The layoff news drew further scrutiny over the CEO’s compensation. Krithivasan earned ₹26.52 crore in FY25, comprising ₹1.39 crore in base salary, ₹2.12 crore in benefits, and ₹23 crore in commission.

This has sparked criticism online, with some questioning why the leadership did not consider salary cuts to reduce job losses.

One X user wrote, “Their lives won’t be terrible at ₹2.5 crore pay vs ₹3 crore. For 12,000 families, lives will be miserable at 0 pay vs ₹15 lacs.”

Another pointed out, “To build a ‘stronger, future-ready company’, 12,000 employees need to be sacked. Of course, the company is more important, what happens to the lives of 12,000 is of no consequence.”

In defense, some argued that the decision wasn’t financially motivated. “They are cutting jobs because there is an oversupply… Not to save money,” one X user noted.

Internal Communication Goes Viral

An internal announcement titled “organisational message” revealed the company’s goal of becoming a “future-ready organisation.”

The message outlined TCS’s intent to invest in emerging technologies, including AI, data, cybersecurity, and cloud, while realigning its workforce accordingly.

“As part of this journey, we will also be releasing associates from the organisation whose deployment may not be feasible,” the letter read. It confirmed that the company would support impacted employees through counselling, outplacement, and severance benefits.

Phased Layoffs and New Bench Policy

Krithivasan assured that the layoffs would occur gradually and compassionately throughout the year. He reiterated, “It will be coming through the year. We won’t do it in a hurry.”

The announcement follows the implementation of a new bench policy requiring employees to bill a minimum of 225 days annually. Employees exceeding 35 bench days are now being released.

Affected individuals are being offered severance packages worth around three months’ salary, provided they resign. Refusal to do so could result in termination without severance.

Online Reactions Intensify

Social media erupted in response to the layoffs, with users expressing frustration and disappointment. One comment read, “Last line… let us come together… and do what? Fire people?” Another remarked, “There was a time when people joined TCS thinking it was as secure as a government job.”

The backlash reflects concerns about job security in India’s IT sector and the emotional toll such decisions impose on thousands of families.