TCS Layoffs Explained: Business Realities Behind the Headlines

TCS Layoffs Explained: Business Realities Behind the Headlines

New Delhi, July 28, 2025 — India’s IT giant Tata Consultancy Services (TCS) has announced one of the largest layoffs in its history, with plans to let go of approximately 12,000 employees—roughly 2% of its global workforce—during the financial year 2026 (April 2025 to March 2026). This major development has sent ripples through the tech industry, raising concerns about job security and the future structure of IT services in India.

Who’s Affected?

The layoffs are primarily targeting middle and senior management levels, along with long-term benched employees—those not currently assigned to client projects. As of June 2025, TCS had a global workforce of over 613,000 employees.

Why AI Is Not to Blame

Despite public speculation, the layoffs are not driven by artificial intelligence (AI) or automation. TCS CEO K. Krithivasan stated that the decision was based on skill mismatches and the inability to redeploy staff effectively across projects.

He emphasized that while AI continues to reshape IT operations, the current job cuts stem from challenges in aligning existing workforce capabilities with the evolving needs of clients and business functions.

Project Fluidity: A Strategic Overhaul

These layoffs are part of an internal restructuring effort titled Project Fluidity, aimed at making TCS a more future-ready and agile organization. The initiative focuses on:

• Retooling and redeploying staff into emerging tech domains
• Expanding into new markets and building capabilities in next-gen technologies
• Scaling up infrastructure and AI investments
• Restructuring the workforce to deliver more outcome-based services

This approach is a response to industry-wide changes, where service models are shifting from headcount-based delivery to more lean, tech-enabled structures.

Macro Trends and Global Slowdown

Beyond internal challenges, these layoffs are also a response to a global slowdown in IT spending. Key markets such as North America are cutting back on non-essential technology investments due to economic uncertainty, inflation, and geopolitical instability.

As enterprise clients become more cautious, IT providers like TCS are being forced to optimize resources and restructure their workforce to maintain efficiency and profitability.

New Bench Policy Adds Pressure

TCS has also introduced a new bench policy, allowing employees only 35 days of non-billable time before requiring them to secure a new project, relocate, undergo retraining, or potentially exit. This move has heightened stress among employees, especially those working remotely or awaiting project reallocation.

Many staff members are now being asked to return to office environments even without assigned work, signaling a cultural shift back to in-person operations and stricter performance oversight.

Support for Affected Employees

Despite the scale of the layoffs, TCS has stated that it is committed to minimizing disruption for both clients and employees. Affected staff will receive:

• Severance packages

• Compensation for notice periods

• Extended healthcare benefits

• Outplacement assistance and counseling

• Opportunities for redeployment within emerging business units where possible

What It Means for the Indian IT Industry

This development marks a critical turning point for the Indian IT sector. Traditionally known for stability and mass hiring, the industry is now undergoing a significant transformation. Skills alignment, digital agility, and outcome-focused delivery models are becoming the new benchmarks.

The pyramid structure, where many junior employees support a smaller layer of managers, is increasingly seen as outdated in a world of automation, AI, and agile delivery. Companies are now prioritizing leaner structures, retraining, and cross-functional capabilities.

Final Thoughts

The layoffs at TCS are a reminder that business strategy—not just technological disruption—is shaping the future of work in India’s IT sector. Companies must now focus on reskilling, agility, and adaptability, as stability alone can no longer guarantee growth or job security.

As the industry evolves, the winners will be those who embrace change, realign their workforces with modern demands, and stay focused on delivering value in a tech-driven global economy.