Tata Consultancy Services has announced a significant workforce reduction of approximately 12,000 employees, representing around 2% of its global staff, amounting to about 613,000 people as of June 2025. Contrary to speculation that these layoffs were driven by AI-led efficiency gains, CEO K. Krithivasan emphasized that the move is rooted in a skill mismatch and redeployment challenges, not AI automation.

Krithivasan made clear in an interview with Moneycontrol that: “This is not because of AI giving some 20 percent productivity gains… This is driven by where there is a skill mismatch or where we think that we have not been able to deploy someone.” Despite extensive efforts—training over 550,000 employees in foundational AI techniques and 100,000 in advanced skills—certain employees, especially at senior levels, couldn’t transition into tech-centric roles.

The layoffs will focus largely on mid and senior management, as well as some entry-level staff who have remained on the bench for extended periods. The reduction will be phased over the next three quarters of fiscal 2026 and spans across all geographies and business domains, according to the company. TCS has reaffirmed its commitment to talent development and continues to hire high-quality professionals with specialized expertise. Krithivasan stressed, “We will continue to look for new talent, and training continues,” highlighting the insurer’s strategy to stay future-ready amid evolving technology demands.

Beyond the layoffs, TCS has introduced updated HR policies requiring employees to have a minimum of 225 billable days per year and resist remaining on the bench for more than 35 days. These changes have raised employee concerns, with some filing complaints with labor departments across different states. Krithivasan also explained that TCS is transitioning from a traditional waterfall delivery model to an agile, product-centric model, reducing reliance on multiple leadership layers and project management roles that were common in legacy project structures.

The company has pledged to treat impacted employees with care, offering a comprehensive exit process including notice period compensation, severance packages, extended health insurance, mental health counseling, and outplacement support, aiming for a compassionate and structured transition.

Rather than reflecting a broader AI-led transformation, analysts suggest the job cuts are emblematic of shifting skill priorities and business models in the IT sector. The decision to streamline headcount highlights both the growing scarcity of deployable domain skills and the imperative to align workforce capabilities with future-ready services.