Tata Consultancy Services Announces Layoffs of 12,000 Employees to Achieve "Future-Ready Organisation" Status

Tata Consultancy Services (TCS) plans to lay off around 12,000 employees, or 2% of its global workforce, across all industries and geographies. The layoffs will primarily affect middle and senior roles, as well as employees on the bench for a long time. TCS CEO K Krithivasan attributed the job cuts to a skill mismatch issue, stating that the company has been training employees in AI skills but senior-level staff may not be able to use entry-level skills. Affected employees will receive payments for notice periods, a severance package, and outplacement opportunities.

Tata Consultancy Services (TCS) has announced plans to lay off around 12,000 employees, representing approximately 2% of its global workforce. The layoffs will primarily impact middle and senior-level roles, as well as those who have been on the bench for an extended period. The decision, attributed to a skill mismatch issue, is part of the company's broader strategy to adapt to AI-led changes and shifts in the workplace model.

TCS CEO K Krithivasan cited the need to address a skill gap as the primary reason for the layoffs. While the company has been investing in AI training for employees, senior-level staff may not be able to apply entry-level AI skills effectively. The layoffs are aimed at streamlining operations and improving profitability amid a weak demand environment and softening revenue growth.

The announcement comes as a surprise to many, considering the traditionally discreet nature of involuntary layoffs in the Indian IT sector. TCS, one of the largest employers in the organized sector with nearly five million people, has seen its operating margins hover between 24–25% over the past five quarters, below its aspirational range of 26–28%. The layoffs are part of a strategic cost-cutting exercise to boost operating margins.

The layoffs are expected to have a significant impact on the company's share price, which has fallen nearly 30% in the past year. Despite being India's largest IT services provider, TCS has seen its stock price decline, while competitors like Infosys, HCL Technologies, Wipro, and Tech Mahindra have also experienced losses in their stock prices.

TCS has stated that affected employees will receive payments for notice periods, a severance package, and outplacement opportunities. The company has been cautious about the potential impact of the layoffs on its margins and has not provided a clear timeline for when the redundancies will begin to take effect.

The announcement has sparked a viral post on X, where users have shared their experiences and shock at TCS's decision. The post, which captures the industry's long-standing perception of TCS as an IT behemoth that prided itself on job stability, has resonated with thousands of IT professionals and alumni.

The layoffs highlight the growing uncertainty in the tech industry, as one of its most stable players moves to cut its workforce. The decision reflects the industry's need to adapt to AI-led changes and shifts in the workplace model, which may require a significant overhaul of existing skills and roles.

References:
[1] https://www.reddit.com/r/developersIndia/comments/1mak83m/tcs_to_lay_off_around_12000_employees_tata/
[2] https://www.business-standard.com/industry/news/tcs-layoffs-aim-to-steady-margins-amid-weak-demand-environment-125072801219_1.html
[3] https://www.financialexpress.com/trending/if-tcs-is-publicly-announcing-layoffs-viral-x-post-recalls-safer-time-at-company-when-nobody-got-fired/3929299/