Amid layoff talk, companies see spike in voluntary retirement expenses

Corporate India has recorded over Rs 1,000 crore in voluntary retirement scheme expenses in recent quarters, reflecting business uncertainty, AI-led disruption and muted global demand

There has been a surge in the amounts that companies are spending on voluntary retirement schemes (VRS).

 

Corporate India recorded over Rs 1,000 crore in VRS expense over the four quarters ending December 2025, including partial numbers from the ongoing December quarter results, shows a Business Standard analysis of data from the Centre for Monitoring Indian Economy (CMIE).  The rolling four-quarter VRS expenses have been in excess of the Rs 1,000 crore mark since March 2025. The last time expenses were sustained over this level was during the Covid-19 pandemic. Companies spent between Rs 1,000 crore and Rs 2,000 crore on a rolling four-quarter basis between September 2020 and December 2021. Such spikes are not seen elsewhere in the data available since 2011.

 

There have been rumours of large-scale layoffs at technology companies such as Tata Consultancy Services earlier in the ongoing financial year amid growth challenges and an uncertain global environment. The sector has been grappling with the effects of AI and other changes globally.  Dublin-based Accenture, for example, earlier in the year reportedly reduced its headcount by over 11,000, letting go of employees who were not up to date on artificial intelligence. The company noted $344 million in employee severance costs in its September results. 

 

The jump in VRS spends may reflect multiple factors affecting technology companies, according to Neeti Sharma, chief executive officer of TeamLease Digital, a firm that helps companies find tech employees. Global uncertainty, US policies that affect hiring and orders from US companies, as well as the rising role of artificial intelligence, have all played a role in recent downsizing, which may have caused VRS expenses to spike. Many large companies had hired people in anticipation of additional demand, which has not materialised in the recent past, according to Sharma.

 

“Over the last two years, we haven’t seen large-scale projects coming in from the western world,” she said, speaking to Business Standard in October.

 

Mid-rung employees with 10–15 years of experience are said to have been the worst affected.

 

There have also been some layoffs in companies from other sectors, such as Britannia Industries and MTNL. Britannia Industries recorded a voluntary retirement expense of Rs 24.8 crore in the financial year ending March 2025 (FY25), compared to Rs 2.9 crore in FY24.

 

“The operations at the company’s factory at Kolkata, West Bengal, have ceased pursuant to acceptance of voluntary retirement scheme by the workers,” said Britannia’s annual report.

 

“Taking into consideration the financial condition of the company, a proposal to introduce VRS has been submitted to the GoI (Government of India) to reduce employee wage cost,” according to the FY25 MTNL annual report. The company had earlier introduced a VRS in 2019, which saw the exit of 14,387 employees at a cost of Rs 2,619.9 crore, though it was not paid at one go.

 

Britannia, MTNL, TCS and Accenture did not reply to emails sent earlier seeking comment.

 

It may be difficult for people to survive with only one skill set, such as software development, people management or sales, Sharma suggested. A composite skill set can help employees facing exits transition to other positions. There may be jobs for experienced employees in global capability centres (GCCs), which perform many operations for multinationals at a lower cost in India. Adding to their skill sets can help employees transition to such roles, Sharma said.