Mumbai, India – Tata Consultancy Services (TCS), India’s leading IT services company, is set to undergo a significant workforce realignment, impacting approximately 2% of its global employee base, or around 12,261 individuals. This decision will primarily affect employees at senior and middle management levels.
In a recent interview with MoneyControl, TCS CEO K. Krithivasan described the upcoming changes as a “hard but necessary reckoning.” While he acknowledged the impact on employees, Krithivasan explicitly denied that the job cuts were a direct result of productivity gains from artificial intelligence (AI).
“This is not because of AI giving some 20 per cent productivity gains,” Krithivasan stated, emphasizing that the decision is driven by “where there is a skill mismatch, or, where we think that we have not been able to deploy someone.” He further assured that these layoffs would be implemented gradually throughout Fiscal Year 2026, without being tied to any specific geographical region or business domain, and would be handled “in a very, very compassionate way.”
However, in a separate official statement announcing the move, TCS provided a broader context for the decision, partially attributing it to the company’s strategic vision for the future, which does include AI. The statement highlighted TCS’s journey to become a “Future-Ready organisation,” encompassing initiatives like investing in new technologies, expanding into new markets, deploying AI at scale for both clients and internal operations, strengthening partnerships, and developing next-generation infrastructure.
“Towards this, a number of reskilling and redeployment initiatives have been underway,” the company explained. “As part of this journey, we will also be releasing associates from the organisation whose deployment may not be feasible. This will impact about 2 per cent of our global workforce, primarily in the middle and the senior grades, over the course of the year.”
This workforce adjustment at TCS comes approximately 30 months after the public debut of ChatGPT, which has prompted considerable discussion about the future business model of India’s IT giants, traditionally reliant on large workforces. The impact of automation on the industry is becoming increasingly evident; just two weeks prior, HCL Technologies Ltd, India’s third-largest IT services firm, also indicated potential layoffs as automation begins to replace work previously performed by fresh graduates.
Industry experts are weighing in on this evolving landscape. Phil Fersht, CEO of HFS Research, told HT, “The impact of AI is eating into the people-heavy services model and forcing the large service providers such as TCS to rebalance their workforces to maintain their profit margins and stay price competitive in a cut-throat market where clients are demanding 20-30% price reductions on deals.”
Fersht predicts this trend will continue for roughly a year as leading providers focus on equipping junior talent with AI-related skills. This shift will, in turn, necessitate the departure of employees who may find it challenging to adapt to the new “services-as-software” AI model