TCS to lay off 12,000 employees in major restructuring Tata Consultancy Services (TCS), India's largest IT services firm, will lay off approximately 12,000 employees over the course of fiscal year 2026, marking one of the most significant workforce restructuring moves in the country's IT sector. The cuts, representing 2% of TCS's global workforce of 613,069 employees, will primarily target middle and senior management positions. CEO K. Krithivasan described the decision as "one of the toughest" he has had to make, emphasizing it as a strategic transformation to build a "future-ready organization" rather than a cost-cutting measure. The restructuring comes as TCS grapples with evolving client demands, widespread AI deployment, and operational model changes in the technology sector. Strategic Realignment Behind Job Cuts According to Krithivasan, the layoffs stem from challenges in redeploying talent whose skills no longer align with the company's evolving requirements. "We have been deploying AI at scale and evaluating skills we will be requiring for the future," Krithivasan told Moneycontrol. Despite extensive investments in reskilling and career development programs, the company found certain roles where effective redeployment proved unfeasible. The CEO clarified that artificial intelligence is not directly driving the job cuts, stating, "This is not because of AI but to address skills for the future. This is about feasibility in deployment, not because we need less people". The company has trained over 114,000 employees in advanced AI skills, with associates spending 15 million hours on emerging technology training during the first quarter alone. Industry Pressure and Financial Context The restructuring reflects broader challenges facing India's $283 billion IT sector, including client reluctance to spend on non-essential technology services amid global economic uncertainty and inflation. TCS reported a 6% year-on-year growth in net profit to ₹12,760 crore for Q1 FY26, though revenue in constant currency declined 3.1%. Krithivasan acknowledged delays in client decision-making and project starts during recent quarters, contributing to the company's strategic reassessment. The move coincides with TCS's revised bench policy, which now requires employees to maintain at least 225 billable days annually and limits non-project time to 35 days. Support for Affected Employees TCS has committed to implementing the transition "with due care" to avoid impacting client service delivery. The company will provide affected employees with severance packages, extended insurance coverage, notice period pay, outplacement services, and counseling support. "We will do it in a very, very compassionate way," Krithivasan assured. The announcement has sent ripples through India's technology sector, with industry analysts expecting other major IT firms may follow TCS's lead in workforce restructuring as companies increasingly turn to automation and AI-driven solutions.
