TCS Initiates Historic Layoffs, Impacting 12,200 Employees Amid Skill Mismatch and New Policies

Tata Consultancy Services (TCS), India's largest IT services company and private employer, has announced plans to lay off approximately 12,200 employees, about 2% of its global workforce, by March 2026. This marks the most significant workforce reduction in the company's 50-year history and is set to affect primarily middle and senior management roles.

The layoffs are primarily attributed to a skill mismatch between current employee capabilities and evolving project requirements, rather than automation or artificial intelligence replacing jobs, according to CEO K Krithivasan. He emphasized that the company remains committed to hiring high-quality talent while making its workforce future ready.

Apart from skill gaps, the layoffs are linked to recent policy changes within TCS. Since June 12, 2025, a stricter bench policy mandates employees maintain a minimum of 225 billable days annually, with bench time capped at 35 days per year. Failure to meet these conditions can lead to disciplinary actions, including termination.

In response to the layoffs, TCS has pledged fair treatment of impacted employees, offering severance packages, notice period pay, extended insurance benefits, and outplacement support to aid in their transition. However, some reports indicate that certain employees were asked to resign in person, with those refusing potentially facing termination without benefits.

The company also delayed onboarding of around 500 lateral hires expected in June-July 2025, citing client-side delays and changes in project scopes amid broader economic uncertainties impacting the Indian IT sector.

TCS's workforce stood at 613,069 as of June 2025. The decision to reduce headcount follows a slowdown in hiring across leading IT firms, with a 72% reduction in workforce expansion in the April-June quarter compared to the previous quarter.

The announcement has caused TCS shares to dip nearly 2%, reflecting market concerns over the cost-cutting measures amid pressures from changing client demands, AI developments, and subdued revenue growth.

This move by TCS reverberates throughout the $245 billion Indian IT industry, highlighting how even companies with traditionally stable employment are now undertaking large-scale layoffs in response to rapid technological and economic shifts.