Tata Consultancy Services (TCS), India’s largest IT services company, has announced plans to lay off around 12,000 employees globally, marking the biggest downsizing in its history. This accounts for approximately 2% of its total workforce, which stood at about 613,000 as of June 2025. The layoffs, which will mostly affect mid- and senior-level employees with over 10 years of experience, come as part of a broader restructuring to make the company “future-ready.”
TCS CEO K. Krithivasan clarified that the move is not driven by artificial intelligence (AI) replacing jobs. Instead, it is due to “skill mismatches” and deployment issues. As the IT landscape evolves, TCS is pushing toward agile models, new markets, and advanced technologies—but not without pushback.
Industry and Employee Reactions
The announcement has triggered strong opposition from employee unions in India. Many have called the layoffs “potentially illegal,” urging employees not to resign under pressure. They are demanding that TCS either reinstate the affected employees or provide fair compensation, full benefits, and support in finding new roles.
Analysts and industry experts are also reacting with caution. Some brokerage firms see this as a risky move in terms of employee morale and client confidence. Execution challenges, rising attrition, and margin pressures have led some analysts to recommend a “sell” or “hold” stance on TCS shares. Many investors are now eyeing alternatives like Infosys and HCL Technologies.
Phil Fersht from HFS Research emphasized that the IT services model is undergoing a shift due to client demands for 20–30% price reductions. This requires firms like TCS to restructure and become more cost-efficient—whether through technology or workforce changes.
TCS Share Reaction and Analyst Views
TCS shares reacted to the layoff news by falling nearly 1.7% on July 28, trading around ₹3,081 on the Bombay Stock Exchange (BSE). This drop reflects investor concerns over the impact of layoffs on operations and sentiment.
However, market opinions remain divided. Citi continues to maintain a “sell” rating, with a target price of ₹3,135, citing risks to profit margins and demand weakness. On the other hand, Investec has retained its “buy” rating with a price target of ₹3,705, calling the layoffs relatively minor given TCS’s overall size.
The mixed reactions show how uncertain the outlook is—not just for TCS, but for the entire IT services sector navigating a challenging global environment.
Support for Affected Employees & Strategic Goals
TCS has said the layoffs will be handled with empathy. Affected employees will receive compensation for the notice period, severance packages, extended health insurance coverage, career transition assistance, and access to counseling services.
The company insists that the layoffs are not a result of AI-driven efficiency. “This is not because AI gave us 20% productivity gains. It’s because of skill mismatches and deployment gaps,” said CEO Krithivasan. TCS is aiming to realign itself toward an agile, product-based, and innovation-led model that is better suited for the future.
Factors such as reduced client spending on discretionary tech projects, global economic uncertainty, and shifting trade policies have all played a part in this strategic shift. TCS is also investing heavily in AI, automation, and next-gen technologies, which are expected to redefine roles and responsibilities across the organization.
Conclusion: A Defining Moment for TCS
TCS’s decision to lay off over 12,000 employees is not just a cost-cutting measure—it signals a deeper transformation within the company. As it prepares for an AI-driven and agile future, the path will not be without friction. Employee discontent, investor caution, and operational risks remain real challenges.
Whether this restructuring will help TCS maintain its leadership in the global IT market depends on how effectively it manages workforce reskilling, maintains client trust, and stays ahead in a fast-changing digital landscape.
F.A.Q.
– Why is TCS laying off 12,000 employees in 2025?
TCS has cited skill mismatches and deployment challenges as the main reasons for the layoffs. The company clarified that the decision is not directly driven by artificial intelligence (AI) replacing jobs, but rather part of a strategic shift toward becoming a more agile, future-ready organization.
– Who is most affected by the TCS layoffs?
The layoffs primarily impact mid- and senior-level employees with more than 10 years of experience. These roles are being reduced to streamline operations and align with evolving project and delivery models.
– Is AI the reason behind these job cuts at TCS?
No. TCS CEO K. Krithivasan has stated clearly that AI is not the main reason behind the layoffs. Instead, it’s about realignment, reskilling needs, and optimizing the workforce to match new business demands and delivery models.
– How has the stock market reacted to the TCS layoff news?
TCS shares dropped approximately 1.7% on the Bombay Stock Exchange following the announcement. Analysts remain divided—some recommend a sell due to margin pressures, while others maintain a buy view, seeing it as a long-term strategic move.
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