IT services firm, Tata Consultancy Services (TCS), will lay off 2 percent of its workforce — over 12,000 employees — through the fiscal year 2026 (April 2025 to March 2026), in a major restructuring move to stay “future-ready and agile” amid rapid changes in technology and workplace models, according to moneycontrol.
The decision will impact employees globally across various domains and regions. TCS CEO K Krithivasan told Moneycontrol that the move was driven by evolving skill demands and internal redeployment challenges.
“We have been calling out new technologies, particularly AI and operating model changes. The ways of working are changing,” said Krithivasan.
He added, “We need to be future-ready and agile. We have been deploying AI at scale and evaluating skills we will be requiring for the future. Still, we find that there are roles where redeployment has not been effective. This will impact roughly 2 percent of our global workforce, primarily at middle and senior levels. It has not been an easy decision and one of the toughest decisions I have had to take as CEO.”
TCS had a headcount of 6.13 lakh employees as of June 2025. A 2 percent cut will affect roughly 12,200 employees.
Restructuring Not Driven by AI Alone
Krithivasan clarified that the layoffs were not triggered by artificial intelligence replacing jobs but were based on strategic feasibility and skill alignment.
“This is not because of AI but to address skills for the future. This is about feasibility in deployment, not because we need less people.”
To support impacted employees, TCS will offer severance pay, extended insurance, notice period salary, and outplacement support.
The layoffs are likely to send ripples across the IT industry, where TCS is often viewed as a bellwether. Analysts suggest smaller companies may follow suit.
Bench Policy Becomes Stricter
In addition to the job cuts, TCS recently revised its bench policy. Employees must now maintain at least 225 billable days annually and spend no more than 35 days on the bench.
“They are removing all the people who are on bench for more than 2 months,” one affected employee told Moneycontrol.
“First, they are allocating an HR person to each employee to meet in person. On meeting them, they will ask the employee to resign immediately and they will get around 3-month salary in severance pay. If they don’t oblige, they will get terminated by the company and won’t be eligible to get the severance pay also.”
TCS layoff: Many saw it coming after benching policy and delayed onboarding
While the CEO stressed that AI was not the reason behind the downsizing, analysts believe that AI is changing the nature of demand. Traditional roles like manual testing are shrinking, and some senior staff reportedly struggle to adapt to new technologies.
According to Saubhik Bhattacharya, General Secretary of AIITEU, TCS has also delayed onboarding for at least 500 lateral hires who were offered positions for June-July 2025.
Krithivasan had earlier acknowledged delays in client decision-making during the April-June quarter of FY25:
“There were very few cancellations; it was more delays or scope reduction. In some places where you expected the project to be finalized and start the work, there were decision-making delays.”
Commenting on the new bench policy, he said, “It’s not an efficiency drive. We just want to ensure associates are able to seek projects and ensure that they remain productive through the year… This is more to put a positive pressure and incentive for them to be allocated and be engaged in client projects.”
TCS layoff: Tough decision after a soft quarter
Earlier this month, Tata Consultancy Services (TCS) reported its Q1 earnings, posting a 6% year-on-year rise in net profit to Rs 12,760 crore — beating market estimates. However, the IT giant’s revenue for the quarter stood at Rs 63,437 crore, marking a 3.1% decline compared to the same period last year.
In the post-results press conference, TCS management noted that the company’s attrition rate stood at 13.8%, slightly above its comfort level of 13%. On hiring plans, the leadership said recruitment would be adjusted based on the demand environment.
Regarding salary hikes, TCS claims the company has not made a decision yet. However, Chief HR Officer Milind Lakkad stated, “If the macroeconomic environment improves and business picks up, we will certainly offer the best possible hikes as we usually do.”