Key Highlights :
TCS to reduce about 12,000 employees (2% of its workforce) in FY26, primarily affecting mid and senior grade personnel.
The move is strategic reorganisation, necessitated by skill mismatches and changing client needs, and not AI-facilitated automation.
Key Background :
Tata Consultancy Services, one of the top IT services and consulting firms in the world, has been among India’s most stable and people-focused employers for some years now. The company’s decision to downsize by 2%, or over 12,000 employees, is one of its biggest lay-offs ever, however. This is a sign of the increased sophistication with which IT firms need to balance human capital against evolving client needs, skill levels, and technological transformations.
Contrary to public beliefs, TCS explained that the retrenchment is not triggered by artificial intelligence and automation replacing human workers. Instead, the move comes in the wake of a mismatch of skills and the inability to redeploy some professionals efficiently. While the company continues to invest in AI and automation, the company explained that the layoffs are inevitable due to internal inefficiencies, long bench periods, and roles that are no longer viable for today’s delivery models.
TCS has brought in new utilisation policies recently that insist on a minimum number of billable days for each employee. It has become nearly impossible for un-skilled or un-allocated resources to justify continued employment without utilisation. Middle and senior professionals, often with superior salary grades but obsolescent or redundant skills, have been worst hit.
At the same time, the company continues to upskill and reskill workers on a mass scale. Over 550,000 staff members have been given core digital and AI-related education, and approximately 100,000 in emerging technologies. Nevertheless, despite all these efforts, a portion of the workforce could not move as quickly as needed to back new needs of projects or clients.
TCS leadership supported that these decisions are not the result of cost-cutting measures instigated by short-term cost pressures but are instead a component of a more extended plan to stay competitive in an increasingly changing technology environment. The company is also entering new geographies, deepening client engagements, and growing digital transformation offerings, all of which necessitate a leaner, faster, and digitally agile talent base.
The layoff decision also mirrors industry trends, with global IT spending becoming more value-based and discriminating. Customers increasingly demand efficiency, lower cost, and quality project staff, putting pressure on the IT giants to rethink historic staffing models. With this, TCS is not only satisfying its own restructuring needs but also setting the pace for what could be a trend of strategic re-shuffling in Indian IT.
