Tata Consultancy Services (TCS), India's largest IT services firm, is planning to reduce its workforce by approximately 2%, impacting over 12,000 employees globally. The layoffs are expected to occur throughout the fiscal year 2026, spanning from April 2025 to March 2026.

Reasons for the Layoffs

The primary reasons cited by TCS for this workforce reduction include macroeconomic uncertainties and disruptions caused by AI-led technologies. The company aims to become a "future-ready organization" by investing in new technologies like AI, expanding into new markets, and realigning its workforce. TCS CEO K Krithivasan stated that the company needs to be "future-ready and agile" in the face of changing technologies and operating models. He clarified that the layoffs are not solely driven by AI replacing jobs but rather by the need to address future skill requirements and ensure feasibility in deployment.

Impacted Employees

The job cuts will primarily target middle and senior management roles within the company. TCS has stated that the transition is being planned carefully to minimize any impact on service delivery to its clients.

Severance Package and Benefits

TCS has announced that affected employees will receive several benefits and support measures during this transition. These include:

• Notice Period Payments: Employees will receive payments for their notice periods.
• Severance Package: An additional severance package will be provided to the impacted employees. The exact details of the severance package may vary based on factors such as tenure and job grade. Some reports suggest a severance pay of around 3 months' salary.
• Extended Insurance Benefits: TCS will look to extend insurance benefits for the affected employees.
• Outplacement Services: The company will offer outplacement opportunities and support to help employees transition to new jobs. This may include job search assistance, career counseling, and training programs.
• Counseling Services: TCS will provide counseling services to support the emotional well-being of employees during this challenging time.

Additional Considerations

• Bench Policy: The layoff decision comes after TCS revised its employee bench policy, which now requires employees to maintain at least 225 billable days annually and limits bench time to 35 days.
• Delayed Onboarding: TCS has also reportedly delayed the onboarding of some lateral hires amid project delays.
• Legal Complaints: The layoff decision also comes days after several TCS employees filed legal complaints against the company's recently tweaked employee bench policy.
• Resignation vs. Termination: Some reports suggest that employees may be asked to resign, with the possibility of termination without severance if they do not comply. However, TCS has stated that it will handle the transition with compassion and provide appropriate benefits.

Reactions and Industry Trends

This move by TCS is seen by some industry observers as a sign of a broader shift, where increasing reliance on automation and margin pressures are driving companies to reduce employee costs. Other IT companies, such as HCLTech, have also indicated plans to optimize their workforce. Layoffs in the tech industry have been a growing trend, with over 80,000 tech workers laid off across 169 companies in 2025 alone.