TCS Layoffs in Mumbai, to trim 12,200 roles globally through FY26 amid skill gaps, not AI benefits.
Tata Consultancy Services (TCS) has a major workforce reduction in Mumbai on July 27, 2025, cutting around 12,200 jobs—approximately 2% of its global headcount—to “become a future-ready organisation.” The layoffs, affecting predominantly mid- and senior-level employees, will be implemented gradually over fiscal year 2026. TCS emphasizes the move is driven by skill mismatches and deployment feasibility rather than AI efficiency gains.
- What: Tata Consultancy Services plans to cut 2% of its workforce—about 12,200 jobs.
- When: Announced July 27, 2025; phased through April 2026.
- Where: Mumbai headquarters; global impact.
- Why: Skill mismatches and inability to deploy certain employees efficiently, part of a “future-ready” strategy.
Strategic Realignment Drives TCS Layoffs
TCS Chief Executive Officer K. Krithivasan explained in an exclusive interview that the decision was “not because of AI giving some 20 percent productivity gains. We are doing this where there is a skill mismatch or where deployment is not feasible”. The company has upskilled over 550,000 employees in basic digital skills and 100,000 in advanced areas but still faces gaps that hinder project staffing.
Despite concerns about automation, Krithivasan stressed the layoffs are a “hard but necessary reckoning” to align talent with evolving client demands and new-tech areas, including AI. He affirmed that TCS will continue recruiting high-quality talent and training its workforce to ensure competitiveness.
Impact on Employees and Support Measures
Affected employees will primarily be those in middle and senior management roles, along with entry-level associates with extended bench time. TCS will handle the process compassionately, offering:
- Notice-period pay and additional severance benefits
- Extended health insurance coverage
- Outplacement and career-transition support
- Counselling and reskilling opportunities
“This transition will be gradual, with internal redeployment explored first. We will talk to impacted colleagues, offer opportunities, and only then proceed if necessary,” Krithivasan said, highlighting a phased approach to minimize disruption.
Bench Policy Overhaul and Legal Challenges
TCS recently tightened its bench policy, requiring a minimum of 225 billable days per year and capping bench time at 35 days. Failure to meet these targets can lead to removal. This stricter policy has sparked legal notices from IT employee unions, which argue the retrenchment is illegal and urge members not to resign under pressure.
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Unions have demanded reinstatement or fair compensation, noting that layoffs during stable financial quarters appear profit-driven rather than necessity-driven.
Market Reaction and Analyst Perspectives
Shares of TCS fell 1.4% to ₹3,090.60 following the announcement, as brokerages warned of potential execution slippages and higher attrition risks. Jefferies cautioned that near-term project delivery could suffer, while Citi maintained a “sell” rating, citing margin pressure and skill mismatches.
Phil Fersht, CEO of HFS Research, commented, “AI is eating into the people-heavy services model, forcing providers like TCS to rebalance workforces to maintain profit margins in a fiercely competitive market where clients demand 20–30% price cuts”.
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TCS’s move is part of an industry-wide recalibration. During April–June 2025, the top six Indian IT firms hired only 3,847 employees, a 72% drop from the previous quarter. Competitors HCLTech and Wipro have also reported productivity-driven staff reductions and tougher performance assessments.
India’s $283 billion IT sector faces weak global demand, inflation, and U.S. trade uncertainties, prompting companies to optimize costs and embrace automation. TCS reported a 1.61% sequential revenue decline and a 4.38% net profit rise to ₹12,760 crore for Q1 FY26, reflecting these headwinds.
Phil Fersht, HFS Research:
“The layoffs at TCS underscore an irreversible shift toward automation. Service-as-software models are replacing labour-heavy approaches, compelling firms to cut roles that no longer align with new delivery frameworks.”
K. Krithivasan, TCS CEO:
“We remain committed to acquiring and training top talent. This action is about deployment feasibility, not cost-cutting for AI gains. We will handle this with the utmost care for our colleagues.”
FAQs
How many employees will TCS lay off?
TCS will reduce its workforce by around 12,200 employees, or 2% of its global headcount of 613,069 as of June 2025.
Why is TCS cutting jobs if AI is not the cause?
According to TCS, the primary driver is a mismatch between existing skills and project requirements, preventing effective redeployment.
What support will impacted employees receive?
Affected staff will get notice-period pay, severance packages, extended insurance, outplacement services, and counselling.
When will the layoffs take place?
The layoffs will be phased throughout fiscal year 2026, ending in March 2026.
Are other IT firms also laying off employees?
Yes, major Indian IT companies like HCLTech and Wipro have implemented productivity-driven reductions and performance assessments in 2025.
TCS’s announcement marks a pivotal moment in India’s IT sector, driven by skill gaps and deployment challenges rather than AI-led productivity alone. As the industry adapts to new technologies and market conditions, employees and stakeholders must stay informed on redeployment opportunities and policy changes. For affected colleagues, engage with HR immediately to understand available support and transition plans.
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