Tata Consultancy Services (TCS) is preparing to cut 12,000 jobs over the coming year as artificial intelligence reshapes the industry landscape. The decision affects two percent of the company’s workforce amid mounting economic pressures and changing client demands.
The Mumbai-based firm will focus its layoffs primarily on middle and senior-level employees as part of what CEO K Krithivasan calls a transition to become a “future-ready organisation.” Krithivasan acknowledged the painful nature of this decision, describing it as one of his most challenging leadership moments.
TCS explained it will be “releasing associates whose deployment may not be feasible” during large-scale transformation efforts. This move follows “Project Fluidity,” an internal program that evaluates senior manager performance and places struggling consultants on the bench. The company’s new bench policy limits unbilled time to just 35 days annually while requiring 225 billable days per year.
India’s $283 billion IT services sector faces unprecedented challenges as clients reduce non-essential technology spending. Economic uncertainties, persistent inflation, and unclear US trade policies have created a cautious business environment. The industry saw workforce expansion drop 72% during April-June, with only 3,847 new hires compared to 13,935 in the previous quarter.
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Artificial intelligence is quietly revolutionizing demand patterns across the technology sector. Automation has eliminated many manual testing roles, leaving senior employees struggling to adapt to emerging technologies. This technological shift fundamentally changes the skills companies need from their workforce.
The timing creates additional pressure as TCS employees have filed legal challenges against the modified bench policy. The company has also delayed onboarding for at least 500 lateral hires originally scheduled for June-July 2025.
The Nascent Information Technology Employees Senate contacted Union labor minister Mansukh Mandaviya, alleging “exploitative practices” after more than 600 experienced candidates had their start dates postponed without warning.
TCS has committed to comprehensive assistance for departing employees, including notice period compensation, enhanced severance benefits, extended insurance coverage, career transition help, outplacement services, and counseling support. This marks the company’s second major layoff since 2012, when 2,500 employees were cut due to performance issues.
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The workforce reduction coincides with TCS planning its lowest salary increases in four years, between 4-8%. Previous increments were 10.5% in FY22, 6-9% in FY23, and 7-9% in FY24. Despite reporting a 5.98% year-over-year profit increase to Rs 12,760 crore for Q1 FY26, revenue fell 1.61% sequentially with weak constant currency growth.
The broader technology sector mirrors these challenges, with approximately 80,150 employees laid off across 169 tech companies in 2025. Microsoft announced 9,000 layoffs earlier this month, highlighting industry-wide pressures. TCS continues investing in emerging technologies, market expansion, AI implementation, partnerships, and infrastructure development as it navigates this transformative period.
