TCS to Lay Off 12,000 Employees in 2025: AI Push and Future-Ready Strategy Behind the Bold Move
In an effort to become more adaptable and ready for the future in the face of rapid technological disruptions, India's largest software services provider, Tata Consultancy Services (TCS), will lay off 2% of its workforce over the course of the next year, or roughly over 12,000 employees. “We have been calling out new technologies, particularly AI and operating model changes. Working practices are evolving. We must be flexible and ready for the future. We have been evaluating skills that will be required in the future and deploying AI on a large scale. We have invested a lot in associates in terms of how we can provide them with career growth and deployment opportunities. Nevertheless, we discover that redeployment has not been successful in some positions. This will impact roughly 2 percent of our global workforce, primarily at middle and senior levels. It has not been an easy decision and one of the toughest decisions I have had to take as CEO,” TCS CEO K Krithivasan told Moneycontrol in an interview on Sunday.
TCS has an employee headcount of 6,13,000 for the latest quarter ended June, so a 2 percent reduction will impact roughly 12,200 employees.
Krithivasan stated, "It's a difficult call we have to take to build a stronger TCS," adding that the business is attempting to make the procedure as compassionate as possible. It will also look to extend insurance benefits and offer outplacement opportunities for the affected employees, in addition to notice period pay and an additional severance package. Because TCS is one of the largest private sector employers in India, its decision to undergo this restructuring may cause smaller competitors to follow suit. When asked if this was the impact of AI-led productivity gains or the nature of macro and demand, Krithivasan said, “This is not because of AI but to address skills for the future. This is about feasibility in deployment not because we need less people.”
They are getting rid of everyone who has been on the bench for more than two months. To begin, each employee will be assigned a human resources representative to meet in person. An affected employee with more than four years of experience told Moneycontrol, who requested anonymity, "Upon meeting them, they will ask the employee to resign immediately and they will receive approximately three months salary in severance pay." The employee went on to say, "If they don't comply, the company will terminate them and they won't be eligible for the severance pay." The employee was immediately let go after submitting their resignation letter, as evidenced by an email sent to them. A copy of this email was seen by Moneycontrol. Two analysts following TCS said the cuts reflect an AI-driven shift, where traditional skills like testing are declining in relevance and some senior employees resist adapting to the new landscape. As businesses increasingly push software providers to utilize AI for greater efficiency, they noted that client projects are becoming smaller and shorter, necessitating fewer staff members. "TCS has also delayed onboarding of at least 500 lateral hires who were issued offer letters and were due to join in June-July 2025," AIITEU General Secretary Saubhik Bhattacharya told Moneycontrol. K Krithivasan, CEO and MD of TCS, disclosed in an interview earlier this month that there were some delays in client decision-making in the April-June quarter, which he anticipates will be resolved in subsequent quarters. There were few cancellations; the majority of delays or scope reductions occurred. In some places where you expected the project to be finalized and start the work, there were decision-making delays,” he said.
Krithivasan had stated, regarding the new bench policy, "It's not an efficiency drive." We simply want associates to be able to find projects and remain productive throughout the year. “This number is not a new number either. We continue to encourage people who have been on the bench for a long time to be assigned quickly. This is more to encourage them to be assigned to client projects and participate in those projects,” he added. New Policy on Billability The Resource Management Group (RMG), which is in charge of assigning employees to projects, made the announcement regarding the new policy on June 12. To ensure that they have 225 days of billability over a twelve-month period at any given point, employees will be required to proactively approach the RMG in order to be assigned to projects under the new rules. If the employee misses on the billability target, they will face disciplinary action including cessation of service, the policy said.
Additionally, employees cannot spend more than 35 days a year on the bench. MoneyCentral reported in March that the largest IT services companies have been reducing bench sizes and average time over the past year and a half to protect margins and increase utilization rates. It is now 35-45 days, down from 45-60 days on average in FY20 and FY21, when the sector's revenue growth was higher than double digits. According to data from Unearth Insight, this pattern is anticipated to continue in FY26 as well.
