Tata Consultancy Services’ decision to lay off about 2%, or 12,261 employees will primarily impact senior and middle-level employees.
Tata Consultancy Services (TCS), India’s largest IT services firm, is set to lay off about 2%, or 12,261 employees, of its global workforce this year.
In an interview with MoneyControl, TCS CEO K Krithivasan termed the decision a “hard but necessary reckoning.” Krithivasan also denied that the job cuts were due to artificial intelligence (AI).
“This is not because of AI giving some 20 per cent productivity gains,” Krithivasan told Moneycontrol.
“This is driven by where there is a skill mismatch, or, where we think that we have not been able to deploy someone,” he added.
Krithivasan told Moneycontrol that the layoffs will be implemented gradually over FY26 and will not be tied to any particular geography or domain. “We will do it in a very, very compassionate way,” he said.
However, in its statement announcing the move, the company attributed the decision, which will primarily impact senior and middle-level employees, partly to AI.
“TCS is on a journey to become a Future-Ready organisation. This includes strategic initiatives on multiple fronts, including investing in new-tech areas, entering new markets, deploying AI at scale for our clients and ourselves, deepening our partnerships, creating next-gen infrastructure, and realigning our workforce model.
Also Read | TCS to lay off over 12,000 employees: Who will the job cut affect?
“Towards this, a number of reskilling and redeployment initiatives have been underway. As part of this journey, we will also be releasing associates from the organisation whose deployment may not be feasible. This will impact about 2 per cent of our global workforce, primarily in the middle and the senior grades, over the course of the year,” it said.
Move comes 30 months after ChatGPT’s debut
As reported by HT, the TCS job cuts come 30 months after the debut of ChatGPT cast a shadow over the business model of India’s IT giants employing armies of coders. Just two weeks ago, India’s third-largest IT services firm HCL Technologies Ltd mentioned potential layoffs as automation replaces work done by graduates.
“The impact of AI is eating into the people-heavy services model and forcing the large service providers such as TCS to rebalance their workforces to maintain their profit margins and stay price competitive in a cut-throat market where clients are demanding 20-30% price reductions on deals,” Phil Fersht, chief executive of HFS Research told HT.
“This trend will last for about a year as the leading providers focus on training junior talent to work with AI solutions, and are forced to move on people who will struggle to align with the new AI model we call services-as-software,” said Fersht.
The article originally appeared on Hindustan Times
