The tech industry is experiencing a significant wave of layoffs in 2025, and now Tata Consultancy Services (TCS), India's largest IT services provider, is joining the trend. TCS plans to reduce its workforce by approximately 2%, impacting over 12,000 employees. This decision, which will primarily affect middle and senior management, has sparked debate about the role of artificial intelligence (AI) and other factors in the company's restructuring.
The Layoff Details
TCS's decision will impact around 12,200 employees across various domains and geographies. The layoffs are planned throughout the financial year 2026, which runs from April 2025 to March 2026. The company has stated that it will provide severance packages, outplacement services, and extended benefits to those affected.
AI: The Scapegoat or a Real Driver?
While many suspect AI to be the primary driver, TCS CEO K Krithivasan downplayed the direct role of AI in the layoffs. He stated that the job cuts are due to skill mismatches and the need to align the workforce with future demands. Krithivasan explained that the company has invested heavily in training and redeploying employees, but some roles are no longer feasible.
However, analysts suggest that AI is quietly reshaping demand in the IT sector. The rise of AI, automation, and evolving project models are changing the skills landscape, making some traditional skills obsolete. Some clients are also reportedly pushing for significant price reductions in new contracts, putting pressure on IT firms to become more efficient.
Attrition and Financial Performance
TCS's employee attrition rate has been climbing, reaching 13.8% in the April-June quarter of FY2025-26. This is a marginal increase compared to the previous quarter. The company's CFO has expressed concern about the attrition rate and indicated a focus on retaining top-level talent.
TCS reported a 0.59% sequential revenue decline in the June 2025 quarter, which was the weakest among the top five IT firms. The company's operating margins also narrowed. These financial pressures may be contributing to the restructuring efforts.
Broader Tech Industry Trends
TCS is not alone in this wave of layoffs. Major tech companies like Microsoft and Intel have also announced significant job cuts in 2025. Microsoft has laid off over 15,000 employees in 2025. Intel is planning to cut more than 25,000 jobs. These companies are citing reasons such as the need to control costs, reallocate resources to AI, and streamline operations.
The tech sector has recorded over 80,000 layoffs globally in 2025. This trend reflects the rapid changes in the industry, driven by AI and other emerging technologies.
Impact on Employees and the Industry
The layoffs at TCS are primarily affecting middle and senior-level employees. This has raised concerns about the "shelf life" of tech professionals, particularly those in management roles. Some experts believe that these layoffs could trigger similar changes at other IT firms in India. The industry may see continued disruption in mid-level roles and traditional skills, with a greater emphasis on automation, cloud services, and AI.
TCS's decision to reduce its workforce reflects the challenges and transformations occurring in the IT industry. While AI may not be the sole driver, it is undeniably a significant factor in the changing skills landscape and business demands. As companies adapt to these changes, employees need to focus on continuous learning and upskilling to remain relevant in the evolving tech landscape.
