Why Is TCS Laying Off 12,000 Employees? How to Prepare for IT Industry Changes

Jul 29, 2025

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ata Consultancy Services (TCS), India’s largest IT services company, has announced plans to lay off approximately 12,000 employees—about 2% of its global workforce of 613,069 as of June 2025—in one of the most significant workforce restructurings in its history.

The layoffs, set to unfold gradually over FY26 (ending March 2026), have sparked widespread speculation, with many attributing the cuts to artificial intelligence (AI) replacing human workers.

However, TCS CEO and Managing Director K Krithivasan has firmly rejected this narrative, revealing the real reasons behind the decision.

In an interview with Moneycontrol, Krithivasan dismissed the notion that AI-induced automation or productivity gains are driving the layoffs. “No, this is not because of AI giving some 20 percent productivity gains.

We are not doing that,” he stated. “This is driven by where there is a skill mismatch, or where we think that we have not been able to deploy someone, “It has not been an easy decision and one of the toughest I had to take,” emphasizing the need to build a “stronger, future-ready company”

What’s Behind the TCS Layoffs?

The layoffs will primarily affect mid- to senior-level employees, with some junior staff who have been on extended bench time—those not assigned to active projects—also impacted.

Despite TCS’s extensive upskilling initiatives, which have trained over 550,000 employees in basic AI skills and more than 100,000 in advanced capabilities, the company faces challenges in redeploying trained staff, particularly senior professionals.

“Some people, especially at senior levels, find it difficult to transition to tech-heavy roles,” Krithivasan explained. This skill mismatch has emerged as a core driver of the layoffs.

Additionally, TCS is undergoing a fundamental shift in its operational structure, moving away from traditional “waterfall” project management methods toward an agile, product-centric delivery model.

This transition reduces the need for conventional project and program managers, particularly those managing multiple leadership layers.

“When we did programs in the old waterfall method, we had multiple leadership teams. That’s changing,” Krithivasan noted (Moneycontrol, 2025).

According to Phil Fersht, CEO of HFS Research, this shift aligns with industry trends, as AI and automation are “diminishing the labour-intensive service delivery approach,” forcing companies like TCS to rebalance workforces to maintain profit margins amid client demands for 20-30% price reductions

Industry and Social Reactions

As a bellwether for India’s IT sector, TCS’s announcement has raised concerns about job security, particularly for mid- and senior-level professionals.

IT employee unions, such as the Forum for IT Employees (FITE), have strongly opposed the layoffs, labeling them “purely profit-oriented” and advising employees not to resign under pressure. FITE argued that TCS’s financial health—evidenced by its consistent revenue growth—suggests the layoffs are driven by cost-cutting rather than necessity.

Support for Affected Employees

Krithivasan described the layoffs as “difficult but necessary,” assuring that TCS will treat affected employees with care and dignity.

The company has promised a comprehensive exit package, including notice period pay, severance benefits, extended health insurance, mental health counseling, and outplacement assistance.

“We will be first talking to the people that could be impacted. We will provide them an opportunity,” Krithivasan said. The layoffs are not targeted by geography or business domain and will be implemented over the next three quarters of FY26.

Broader Industry Context

The layoffs come amid a broader slowdown in India’s IT sector, which employs over 5 million people and contributes significantly to the country’s GDP. According to The Economic Times, job additions across the top six Indian IT majors fell by over 72% in the April-June 2025 quarter, with only 3,847 new hires compared to 13,935 in the previous quarter.

Global IT spending remains cautious, with clients demanding significant cost reductions, adding pressure on firms like TCS to optimize their workforce.

Despite the layoffs, TCS remains committed to hiring “future-ready” talent in high-demand areas such as AI, cloud, cybersecurity, and digital transformation, with Krithivasan noting that the company is “still hiring people with the right skills”

How Young Professionals Can Prepare for the Future

The TCS layoffs underscore the rapidly evolving nature of the IT industry, where technological advancements and changing business models demand adaptability.

For young professionals entering or early in their IT careers, proactive preparation is key to staying competitive. Here are actionable steps to build a future-ready career, supported by industry insights:

Prioritize In-Demand Skills:

Focus on high-demand areas like AI, machine learning, cloud computing, and cybersecurity, as TCS and other IT firms continue to hire in these fields. A 2025 World Economic Forum report highlights that 50% of jobs will require reskilling by 2027 due to automation and digital transformation

Action: Enroll in online courses like Coursera’s “AI for Everyone” or Udemy’s “AWS Certified Solutions Architect” to gain relevant skills. Certifications from AWS, Google Cloud, or Microsoft can boost employability.

Build a Strong Professional Network:

Networking can open doors to opportunities, especially during industry slowdowns. LinkedIn data shows that 85% of jobs are filled through networking

Action: Engage on platforms like LinkedIn, attend industry webinars, or join IT communities like GitHub or Stack Overflow to connect with peers and mentors.

Develop Soft Skills and Resilience:

With layoffs impacting morale, emotional intelligence and adaptability are critical. A 2025 McKinsey report emphasizes that soft skills like problem-solving and communication are increasingly valued in tech roles

Action: Practice mindfulness with tools like Headspace or read The Resilience Project by Hugh van Cuylenburg to build mental resilience.

Stay Updated on Industry Trends

The IT sector’s rapid evolution requires continuous learning. Staying updated on news and reports can help.

Action: Subscribe to newsletters like EducationNext or follow IT influencers on X for real-time updates on AI and tech trends.

By proactively upskilling and staying adaptable, young professionals can navigate challenges like those faced by TCS employees and build sustainable careers in a dynamic industry.

What’s Next for India’s IT Sector?

As one of India’s largest private-sector employers, TCS’s layoffs have sparked questions about the future of white-collar jobs in the country. Will other IT giants, such as Infosys or Wipro, follow suit with similar restructurings?

For now, TCS’s focus remains on navigating this transition while supporting affected employees and investing in future-ready skills. However, the layoffs signal a broader reckoning for India’s IT sector as it adapts to a rapidly evolving global landscape.

Resources for IT Professionals and Job Seekers

The TCS layoffs highlight the importance of upskilling, career adaptability, and mental resilience. Below are recommended books and courses to help young professionals and job seekers stay competitive in the IT industry.

Books: