TCS to lay off 2% of its workforce, impacting over 12,000 employees

This is the second time the company has announced a layoff. The last instance was in 2012 when the firm laid off around 2,500 employees due to underperformance

India’s largest IT services provider Tata Consultancy Services (TCS) on Sunday said it would lay off about 2 per cent, or about 12,260 employees, of its global workforce of 613,069 this financial year, as it seeks to become a more agile organisation in an era of artificial intelligence (AI)-led business transformation.

 

This is the second major layoff in the company’s history, the previous one being in 2012, when around 2,500 employees were let go for underperformance.

 

The latest announcement shows the extent of challenges faced by Indian IT services firms amid a sluggish global economy, geopolitical tensions, tariff concerns, and a slowdown in North America, their perennially biggest market.

 

 

In a statement, the IT services major said: “TCS is on a journey to become a future-ready organisation. This includes strategic initiatives on multiple fronts, including investing in new-tech areas, entering new markets, deploying AI at scale for our clients and ourselves, deepening our partnerships, creating next-gen infrastructure and realigning our workforce model.” 

 

As part of this, the firm said it was undertaking a number of reskilling and redeployment initiatives. “We will be releasing associates from the organisation whose deployment may not be feasible. This will impact about 2 per cent of our global workforce, primarily in the middle and the senior grades, over the course of the year. This transition is being planned with due care to ensure there is no impact on service delivery to our clients,” said the company. 

 

Separately, TCS has launched Project Fluidity, under which the firm is looking to bench senior managers or consultants if their performance is deemed unsatisfactory, people familiar with the matter told Business Standard. Most of the layoffs are expected in mid- to senior-management levels as the company reshapes its workforce pyramid to suit the needs of changing times.

 

The company, however, did not immediately respond to queries by Business Standard whether these layoffs are part of the Project Fluidity and how much it expects to save from this initiative.

 

Saurabh Gupta, president of research and advisory firm HfS Research, said TCS’s decision

 

to cut jobs marks a clear pivot in response to AI disruption and economic pressure.

 

“This is not a seasonal trimming but a structural shift, driven by AI and automation replacing legacy roles, a stricter 35-day bench policy, and global headwinds like tariffs and delayed client spending.”

 

Saurabh Gupta said HFS Research sees this as a margin-first move. “TCS is preserving profitability by aggressively optimising costs. But the company needs to balance it with a bold reinvestment in AI-native services or IP-led growth, or it risks falling behind more agile competitors. The old people-dependent delivery model is breaking. This is just the beginning of what HFS calls “services-as-software,” he added.

 

Over the past two years, tech firms have announced layoffs. Microsoft earlier this month said it would lay off about 9,000, or less than 4 per cent, of its employees. This is the firm’s third round of layoffs this year. 

 

According to Layoffs.fyi, about 80,150 employees have been laid off across 169 tech companies in 2025 alone.

 

TCS’s layoff announcement comes days after the firm reported one of its weakest first-quarter results since 2020. In Q1FY26, the company’s constant currency revenue fell 3.1 per cent, while dollar revenue declined 1.1 per cent, making it the worst performer in constant currency growth among the top five Indian IT service providers.

 

During the first quarter ended June 30, 2020, when the Covid-19 pandemic disrupted global markets, TCS saw constant currency revenue drop 6.3 per cent and dollar revenue decline 7.8 per cent.

 

Talking to media after the Q1 results earlier this month, TCS Chief Executive Officer K Krithivasan had said high single digit growth would be challenging in the current economic environment as clients defer discretionary spends and new deals take time to materialise into revenues.

 

In the statement, the company added: “We understand that this is a challenging time for our colleagues likely to be affected. We thank them for their service and we will be making all efforts to provide appropriate benefits, outplacement, counselling, and support as they transition to new opportunities.”

 

The firm recently tweaked its policy allowing employees to be on bench (unassigned to a billable project) for less than 35 days.

 

Last week, the labour and employment ministry asked TCS to attend a meeting with the chief labour commissioner in New Delhi on August 1 to discuss the delay in onboarding of more than 600 experienced professionals in the company.

 

The company becomes the first among the top five to acknowledge the problems with AI and the weak business environment. Hiring has already been on hold for most companies pending an improved demand scenario.