We're confident of hiring 40,000 freshers from campuses this year: TCS CHRO

He talks about why this quarterly decline is not indicative of a slowdown in demand, and how TCS is positioning itself as an AI-first organisation

Even as TCS senior management signals optimism for a stronger CY2025, the company experienced a reduction of over 5,000 employees in its headcount for Q3FY25. Milind Lakkad, chief human resources officer (CHRO), spoke with Shivani Shinde about why this quarterly decline is not indicative of a slowdown in demand, and how TCS is positioning itself as an AI-first organisation. Edited excerpts.

 

You said in a recent press conference that there is no direct correlation between headcount fluctuations and growth. Would it be fair to assume that AI is contributing to this trend?

 

No, when I referenced the lack of correlation between headcount and growth, I was specifically referring to Q3. In any given quarter, changes in headcount don't always reflect growth or demand because our hiring plans are structured on an annual basis.

 

The headcount is influenced by several factors, including new hires, productivity improvements, utilisation rates, pyramid optimisation, and the broader business environment. It's important to note that a reduction in headcount during one quarter does not necessarily signal slower growth, nor does an increase in headcount directly indicate stronger growth.

 

When we hire freshers, they join throughout the year, even if the offers are made earlier. I am confident we will meet our target of hiring 40,000 freshers from campuses this year.

 

Even with quarterly fluctuations in headcount, we effectively manage scale through a combination of employees on the bench, ongoing productivity enhancements, and other operational adjustments.

 

How is TCS preparing to become an AI-first company, especially when it comes to talent acquisition and development?

 

We began this journey several months ago by laying a strong foundation to ensure that every individual at TCS has a fundamental understanding of AI. Our focus now is on building a talent pyramid where individuals with diverse skill sets not only contribute but continuously evolve their capabilities. Ultimately, our goal is to position TCS as a truly AI-first organisation.

 

This transformation means that AI is integrated into every aspect of our talent operations—from acquisition to development and deployment. For instance, in talent acquisition, we’re leveraging AI to optimise multiple layers of the process, such as streamlining the creation of job descriptions, using historical data to better understand client needs, and even incorporating AI-assisted interviews to enhance recruitment efficiency.

 

On the talent development side, we’ve introduced an AI-powered interview coach that helps assess technical skills and also supports the development of soft skills. The long-term vision is to create an AI-driven ecosystem that enhances and supports a wide range of functions, including sales, delivery, and beyond.

 

You spoke about creating a ‘pyramid with different skill sets’. Can you elaborate on this concept?

 

We will continue to maintain all the traditional levels — E0, E1, E2, E3, and so on — but the skill expectations at each level will evolve to align with the demands of the AI era. For example, at the E0 (entry-level) tier, employees will be expected to have a foundational understanding of large language models (LLMs) and their applications. At the E1 level, the focus will shift to working with LLM APIs, a skill set similar to that of prompt engineers. At E2, employees will begin to use TCS GenAI tools, and at E3 and above, we will expect advanced expertise in AI and its applications across various domains.

 

This evolving structure represents the AI-driven pyramid we are building at TCS —one that ensures every employee is equipped with the skills needed to thrive in an AI-first organisation.

 

Where do you stand on the AI transformation journey today?

 

We are already in a strong position, but this is an ongoing journey. We’ve made significant strides, and today, almost everyone at TCS possesses a solid understanding of the basic AI skills and tools. However, as AI continues to evolve, so will our engagement models and skill requirements. This transformation is continuous, and we are fully prepared to adapt and stay ahead of the curve.

 

You’ve said that AI won’t impact headcount growth, yet we’ve seen Salesforce’s CEO stating that AI-driven productivity gains have reduced the need for additional hiring, and a Bloomberg report predicting global banks will cut 200,000 jobs over the next few years. How do you respond to this?

 

For AI to have a significant impact on headcount, the underlying data must first be ready and effectively integrated. In the services industry, customer context is critical, and capturing this knowledge in systems takes time. While AI will certainly transform jobs, we believe it will more likely change the nature of those roles rather than eliminate them altogether.

 

In industries like ours, where human context, understanding, and client relationships are vital, the shift to AI will be gradual. AI will enhance efficiency, but humans will continue to play a crucial role—especially in client-facing and knowledge-intensive roles, where the value of human insight and empathy remains irreplaceable.

 

Do you think it’s time to prioritise skills over formal degrees?

 

This debate has been ongoing for years. Many talented individuals excel without formal degrees, particularly in technical fields. However, as a services company, we require more than just coding skills; our roles demand a diverse range of competencies. Degrees often provide the foundational understanding necessary for these broader demands, which is essential in our industry.

 

Are Gen Z employees difficult to work with?

 

We don’t think so. Gen Z brings a fresh perspective, and we always ask ourselves, "What can we learn from them?" It’s a process of mutual adjustment. Every generation must adapt to the next, and this dynamic works both ways. We embrace their unique viewpoints, as they are an invaluable part of our workforce.