TCS to shed 2% of workforce, impact 12,000 employees, as it braces for rapid tech shifts

Tata Consultancy Services (TCS), the largest software services firm in India, has decided to cut 2 per cent of its workforce, or roughly over 12,000 employees in the ongoing financial year, in a bid to tackle rapid disruptions in technology and be future-ready. The decision will impact employees across countries and domains and will be implemented in the fiscal year from April 2025 to March 2026.

“We have been calling out new technologies, particularly AI and operating model changes. The ways of working are changing. We need to be future-ready and agile. We have been deploying AI at scale and evaluating skills we will be requiring for the future,” TCS CEO K Krithivasan told Moneycontrol.

“We have invested a lot in associates in terms of how we can provide them with career growth and deployment opportunities. Still, we find that there are roles where redeployment has not been effective. This will impact roughly 2 per cent of our global workforce, primarily at middle and senior levels. It has not been an easy decision and is one of the toughest decisions I have had to take as CEO,” Krithivasan added.

With an employee headcount of 6,13,000 for the latest quarter ended in June, a 2 per cent reduction by TCS will impact roughly 12,200 employees.

‘It is a difficult call…’

“It’s a difficult call we have to take to build a stronger TCS,” Krithivasan said, adding that the company is working to make the process as compassionate as possible.

The firm will offer notice period pay and an added severance package and will also look to extend insurance benefits besides offering outplacement opportunities for the impacted employees.

The restructuring by TCS, one of the largest employers in the private sector in the country, is likely to have a ripple effect in the industry, with other firms also following suit.

“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,” Krithivasan said on being asked if the decision to trim the workforce was the impact of AI-led productivity gains.

IT firm also tweaks bench policy

The move comes weeks after TCS tweaked its employee bench policy, requiring staff to maintain at least 225 billable days annually and also limiting bench time to less than 35 days.

Analysts say traditional skills like testing are declining in relevance in the industry, and client projects are becoming smaller and shorter, demanding fewer staff as companies increasingly push software providers to leverage AI.

On the new bench policy, Krithivasan had said, “It's not an efficiency drive. We just want to ensure associates are able to seek projects and ensure that they remain productive through the year.”