TCS plans to lay off 2%, or nearly 12,000 staff, citing skill mismatch, not AI. Critics argue AI is a key factor. Unions call the move illegal, warning it could set a harmful precedent. Centre seeks clarity as protests mount.
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Bengaluru: Tata Consultancy Services (TCS)'s decision to reduce 2% of the company's workforce triggered severe backlash, forcing the company's CEO and MD K Krithivasan to state that the move was not due to the implementation of Artificial Intelligence (AI) but the skill mismatch between employees and employers. However, a deep dive into the statement reveals the influence of AI as one of the main reasons for TCS' decision.
Krithivasan stated that employees beyond level 1 and level 2 skills could not be given AI training as they may not be able to use the entry level skills. He had also said that a significant portion of the layoffs will be in the middle and the senior levels. Further, TCS updated its HR rules mandating that its staff should work on projects for at least 225 days a year, with a bench time of only 35 days. What this means is that employees fear those who do not work on a project for more than 35 days, such as people returning from maternity leave, could be sacked or be liable to any disciplinary action. It also allegedly increases work pressure.
How Structured Layoffs Can Help TCS
The layoffs at TCS is planned to be implemented gradually throughout FY26, and not in a hurry. He guaranteed that layoffs will start only when redeployment options are exhausted. This is a strategic way to keep the attrition rate, the rate at which employees leave the company, steady. By avoiding abrupt exits and workforce stability, TCS can transition to the needs of the market smoothly without suffering major losses. However, this gives less priority to the employees who have been working in the organisation for some time.
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“We won't do the layoffs in a hurry. We will first talk to the people that could be impacted. We will provide them an opportunity.”
According to Milind Shah, Managing Director of Randstad Digital India, the need for employees still exist but is more leaned towards people with specialised skills such as AI integration, machine learning, data engineering, and cybersecurity. Hence, newer people will be preferred to older people to maximise the output of an employee. It is not just TCS, Major tech companies like Microsoft, Intel, Google, and Amazon are continuing to lay off thousands of employees in 2025.
The Indian IT sector's growth has been reported at around 3.8%, which is slower than past years. Experts say this is mainly due to the global economic slowdown in major markets like the US and Europe apart from internal issues. The sector is undergoing a structural shift and is forced to adapt, ranging from reskilling the workforce to rethinking its business model.
Unions Oppose Layoffs, Calls it Illegal
The Nascent Information Technology Employees Senate (NITES) has written a letter to Union Minister for Labour and Employment Mansukh Mandaviya stating that the Indian law does not allow a company to sack an employee who has served for over a year without one month's notice or wages. They also accused TCS of wilfully violating law and urged the government to issue a notice to them. The union also stated that they, along with other IT employee unions across India, will organise nationwide protests and increase public pressure.
This is a mass sacking dressed in corporate jargon...If a company of TCS's scale is allowed to carry out mass layoffs without following due process and without consequences, it will set a dangerous precedent for other companies. The move will normalise job insecurity, erode employee rights, and severely damage trust in India's employment ecosystem.
The Centre has reportedly stated that is keeping a close watch on the developments and has sought clarity on the layoffs with TCS.
