TCS to Lay Off Over 12,000 Employees Amid AI Disruption and Economic Pressures

In a landmark decision, Tata Consultancy Services (TCS), India’s largest IT services provider and the crown jewel of the Tata Group, is set to let go of 12,261 employees — nearly 2% of its global workforce — making it the biggest layoff in the company’s history.

The move comes as TCS navigates a rapidly evolving technology landscape marked by AI-driven disruption, weakening demand, and global economic headwinds. The company, which had a workforce of over 610,000 as of June, is restructuring to align with new business realities. Historically, workforce reduction at TCS has been modest — for instance, in FY15, the firm cut about 3,000 jobs, roughly 1% of its employee base.

This latest wave of layoffs will largely impact mid- to senior-level professionals, particularly those who cannot be transitioned into new roles within the organization. The restructuring signals a major pivot for TCS, as it intensifies its focus on automation and AI to remain competitive in an increasingly margin-sensitive market.

“This transformation is about preparing TCS for the future,” CEO K Krithivasan noted in an internal communication. “While such changes are essential for our continued growth, we recognize the challenges it brings to our colleagues. We deeply appreciate their contributions and will support them through this transition.”

Analysts say the decision reflects a broader industry trend. Phil Fersht, CEO of HfS Research, highlighted that AI is significantly disrupting the traditional, manpower-heavy IT services model. Clients are also pushing for steep cost reductions — sometimes as much as 20-30% — compelling firms like TCS to reevaluate their cost structures.

The trend isn’t isolated to TCS. Other Tata Group companies such as Tata Motors and Tata Steel have also undertaken job cuts in recent years to streamline operations and boost profitability. In 2019, Tata Steel cut 3,000 positions in its European business.

This move by TCS underscores the shifting priorities within the IT industry, where future-readiness increasingly hinges on agility, automation, and leaner operations.

Source: Economic Times