Quick Take
- TCS plans to lay off 10,000–12,000 employees (2% of 600,000+ workforce) over coming year
- CEO cites “skill mismatches” and “limited deployment opportunities,” not AI automation
- Cuts target middle and senior management in shift to product-centric delivery models
- Indian IT sector employs 5.4–5.6 million people, generated ₹254–268 billion in FY2024
Tata Consultancy Services cuts workforce by 12,000 as industry transformation accelerates — India’s largest IT company announced significant workforce reductions targeting middle and senior management as the company adapts to ₹254–268 billion industry transformation demands. The cuts represent 2% of TCS’s massive 600,000+ global workforce.
K. Krithivasan, CEO and MD of TCS, said the layoffs stem from operational requirements rather than artificial intelligence displacement. “This is not because of AI giving some 20% productivity gains. This is driven by whether there is a skill mismatch or where we think we have not been able to deploy someone,” he explained.
The company now requires 225 billable days annually with maximum 35-day idle periods between projects. These changes have sparked legal complaints from affected employees.
Traditional Models Give Way to Agile Delivery
TCS and its competitors are moving away from traditional waterfall project management toward agile, product-aligned delivery models. This shift reduces demand for non-technical managers while increasing need for specialized, adaptable skills.
“When we did programs in the old waterfall method, we had multiple leadership teams driving it. However, as we transition towards a more product-aligned model, where we are more agile and clients work alongside us, they also bring in their leadership teams. The pure non-technical managerial talent is required less,” Krithivasan said.
Broader Impact Across India’s IT Workforce
The workforce reduction reflects industry-wide pressures affecting India’s 5.4–5.6 million IT professionals. Major players including Infosys and Wipro are similarly reevaluating workforce structures as client expectations around agility and innovation intensify.
NASSCOM reports organizations are pivoting toward product-aligned delivery models, fundamentally changing skill requirements across the sector.
AI Skills Drive Premium Compensation
AI capabilities now command 28% higher wages on average, representing nearly $18,000 additional annual compensation according to Lightcast research analyzing over 1.3 billion job postings.
Demand for AI skills in non-technical roles has surged 800% since 2022. Marketing, HR, finance, and education sectors show the strongest growth. Workers combining domain expertise with AI fluency earn premium salaries.
Tech job postings for AI skills are shifting industry distribution. In 2019, 61% of AI jobs were in IT; by 2024, this dropped to 49% as opportunities expanded to other industries.
Executive Pay Questions as Workers Face Cuts
The Nascent Information Technology Employees Senate called the layoffs “inhumane” and “unethical,” appealing to Labour Minister Mansukh Mandaviya for intervention. Questions arise about executive compensation as Krithivasan’s annual compensation exceeds ₹25 crore according to company filings.
TCS’s performance requirements and workforce restructuring signal urgent need for strategic workforce planning across Indian enterprises. Companies must identify automation-vulnerable roles while investing in reskilling programs.
What This Means Going Forward
Traditional IT roles are contracting while opportunities emerge for professionals blending human judgment with AI capabilities across industries. The message for business leaders: adapt quickly or risk obsolescence in India’s evolving technology landscape.
Companies must balance operational efficiency with workforce development to maintain competitive advantage in the ₹254–268 billion Indian IT sector transformation.
