Tata Consultancy Services (TCS) plans to downsize its worldwide workforce by around 2 percent, impacting around 12,000 employees during the fiscal year ending 2026 (April 2025 – March 2026). The reduction in force will mainly touch mid- and senior-level personnel in different business segments and geographies.
TCS CEO K Krithivasan called the decision one of the most challenging as CEO, one that makes the company more future-ready and agile with the fast pace of technological changes, particularly because of artificial intelligence (AI) and changing operating models. He clarified that the lay-off plan is not because of AI taking away jobs but due to a strategic choice fueled by mismatches in skills and fitting talent to new business requirements.
The firm has put a lot of money into redeployment and retraining activities but discovered that certain jobs were not successfully transitioned. Even with these layoffs, TCS had reassured stakeholders that service delivery to customers will not be affected and that the layoffs will come with severance pay, notice period compensation, longer insurance coverage, and career transition assistance for the affected staff.
This staff cutting is part of larger woes for India’s $283 billion IT industry, facing softening demand from its major foreign customers because of economic uncertainty, inflationary pressures, and U.S. trade policies. TCS posted a 6 percent quarter-on-quarter annual growth in net profit for Q1 FY26 last week but registered a marginal 3.1 percent fall in quarterly revenue and delayed client project starts.
Moreover, TCS had a more stringent bench policy that mandated workers to have at least 225 billable days a year, making conditions more stringent for those not assigned to projects. The change in this policy has put more internal pressures on employees and is responsible for some of the workforce reduction.
Industry experts opine that since the biggest Indian IT player, TCS’s action is indicative of the same restructuring waves across smaller IT players in adjusting to the technology shift towards automation, AI, and client demand paradigm shifts.
Overall, TCS’s future staff reduction is indicative of the company’s intent to refocus itself amid the changing technology landscape, while maintaining operational efficiency while taking care of the employees during a problematic phase for the global IT services sector.
