 "IT SERVICES, IT SECTOR")
An air of disbelief hung over Tata Consultancy Services (TCS) offices on Monday morning, a day after the largest information-technology (IT) services company sent out an unexpected communication to its employees, announcing its biggest layoff.
At TCS — long seen as an ideal destination for steady and secure job — employees found it tough to come to terms with the layoff announcement that broke the Sunday afternoon peace.
There were many, however, who had no clue on Sunday.
Since the official communication that 2 per cent of the workforce, or over 12,000 employees, would have to leave was sent out on a holiday, many employees learnt about the layoffs through the Monday morning newspapers, just before heading to office.
“I think the internal portal carried the update on Sunday afternoon, but most of us wouldn’t have checked it. Reading about our own company’s layoffs in the newspaper was shocking,” said a mid-level employee who did not wish to be named. “There was no prior indication from HR (human resource department). No announcement. Nothing.”
This is the first time that TCS has officially announced a large-scale layoff. The only comparable instance was in 2012, when the company had let go of around 2,500 employees. For a Tata Group company — and especially TCS, which weathered past crises like Covid-19 and the 2008 financial meltdown without cutting jobs — this marks a dramatic cultural shift.
“TCS was considered a safe company. It stood by employees during every downturn. That’s what makes this harder to digest,” said another employee. Several expressed discomfort over what they saw as a departure from the “Tata values”. Another noted: “This is happening just a year after Ratan Tata’s passing.”
The layoffs have also created confusion and mixed messaging internally. Many employees pointed out that while the company had been consistently pushing for artificial intelligence (AI) -readiness — and encouraging staff to reskill accordingly — this move seemed to contradict that effort.
“We’re being told to train ourselves in AI and we’ve been doing it. Then why this layoff? What does it say about how AI-ready we really are,” asked a disappointed senior executive.
The fear and anxiety now extend beyond TCS. There is a growing concern that other major tech firms might follow suit. Many are also apprehensive that the actual number of layoffs at TCS might be much higher than what has been announced.
“Attrition is already high. If TCS had simply managed workforce exits through natural attrition, it could have avoided this disruption over the next two to three quarters,” said a senior HR leader in the industry.
Meanwhile, employee unions have taken up the cause of TCS employees. The Karnataka State IT/ITeS Employees Union (Kitu), in a letter, condemned this layoff as illegal action by the TCS management. The union said it was approaching the labour department against the “unlawful move”.
“According to the Industrial Disputes Act, it is a punishable offence for an employer to compel an employee to resign. Every employee has the legal right to refuse to sign a forced resignation,” according to a Kitu letter.
Overhiring hangover
Industry analysts and HR experts largely attribute the decision to the overhiring spree during the pandemic years. While many peers corrected course by freezing or slowing down hiring between FY23 and FY25, TCS continued to hire aggressively from campuses and laterally, especially to build AI-related capabilities.
What has surprised many observers is that the layoffs are focused on the mid to senior levels — typically the most stable layer in IT organisational structures. Experts believe this could prompt a wider reassessment of talent pyramids across the sector. Only those who have either domain expertise, knowhow of client IP, or are good at technology, will be able to survive.
According to data from specialist staffing firm Xpheno, the highest churn across Indian IT players occurs in the 1-5-year experience bracket (17 per cent), followed by the 5-10-year band (12 per cent). In contrast, attrition drops to 7 per cent for those with 10-15 years of experience and just 4 per cent for employees with over 15 years.
Kamal Karanth, cofounder of Xpheno, attributes the current bloated structure to the hiring boom of 2021-22. “The big-fat middle layer is a net outcome of the hyper-hiring phase, combined with three cycles of low to no fresher intakes,” he said.
“A large chunk of lateral hiring made during the demand surge now sits in the 5-13-year experience range — the very layers seeing restructuring now. Ironically, these were also the layers with the highest churn during the hiring boom,” he added.
Neeti Sharma, CEO of TeamLease Digital, said that people managers, especially those with 15-20 years of experience, are the most impacted. “These are typically project managers handling backend delivery. Many have not upskilled enough to take on front-facing or AI-related roles. If they don’t adapt to the new demands, it is tough to justify those roles.”
