📉 TCS Layoffs 2025–26: Full Context & Reasoning

🔔 Announcement Summary:

• Tata Consultancy Services (TCS), India’s largest IT services firm, is set to lay off 12,000 employees, about 2% of its global workforce.

• This marks the largest-ever workforce reduction in TCS history.

• Layoffs will be gradual, happening through FY26.

• Mid-level and senior management roles are most affected.

📌 Source: The Times of India, Free Press Journal, Reuters, Indiatimes

❌ Not Due to AI – Clarification by CEO K. Krithivasan

“This is not because of AI giving some 20% productivity gains.”
— K. Krithivasan, CEO, TCS (Moneycontrol interview)

• Krithivasan dismissed AI as the core reason behind the cuts.

• Instead, the decision is based on:

  • Skill mismatches

  • Redeployment failures

  • Changing business structures

🧾 Core Reasons for the Layoffs:

1. 🧠 Skill Mismatch & Inflexibility

• Many senior employees find it difficult to adapt to modern, tech-heavy roles.

• TCS has trained:

  • 5.5 lakh+ employees in basic AI

  • 1 lakh+ in advanced AI
    But reskilling didn’t always lead to redeployment.

📌 Source: Indiatimes, The Economic Times

2. 🧪 AI Integration & Automation

• AI adoption is streamlining many operations.

• While AI isn’t the direct reason, it has indirectly reduced the need for traditional roles.

📌 Source: Indiatimes, Reuters

3. 🌍 Economic Uncertainty

• Global IT spending is cautious.

• TCS is responding to client cost pressures, market volatility, and demand slowdowns.

📌 Source: Reuters, The Times of India

4. 💸 Cost Optimization Pressures

• Clients are demanding 20–30% cost reductions.

• TCS is optimizing its workforce and delivery layers to maintain profit margins.

📌 Source: Reuters, TOI

🕰️ New Bench Policy (2025 Onwards)

• TCS now requires employees to be deployed on a project for at least 225 days a year.

• If an employee fails to meet this, they may be eligible for termination.

• This move has sparked concerns over job security.

📌 Source: India Today, EdexLive, The Times of India

🤝 Support for Affected Employees

TCS promises a “compassionate” exit process, including:

• 💰 Severance packages

• 🏥 Extended health insurance

• 🧠 Mental health counseling

• 💼 Outplacement assistance

📌 Source: SightsIn Plus, Business Standard, TOI

⚖️ Allegations in the United States

• 20+ former U.S.-based TCS employees filed complaints with the EEOC (Equal Employment Opportunity Commission).

• They allege discrimination based on race and age:

  • Claim TCS favored Indian employees on H-1B visas.

  • Older, non-South Asian Americans were disproportionately laid off.

• TCS has denied these allegations, calling them:

  “Meritless and misleading.”

📌 Source: India Today, Business Standard, Economic Times

🔁 Structural & Cultural Shift

• TCS is moving from “waterfall” to agile, product-centric delivery models.

• This reduces the need for layered managerial roles.

• Krithivasan said:

  “Earlier, in waterfall models, we had multiple leadership layers. That’s changing.”

📈 What’s Next?

• While layoffs are underway, TCS remains committed to hiring new, future-ready talent.

• Focus is shifting to AI, cloud, cybersecurity, and digital transformation roles.

“This is not about demand collapse. It’s about being future-ready.”
— Krithivasan

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