Mumbai, July 28, 2025 – Tata Consultancy Services (TCS) has launched what may be its largest workforce reduction yet, planning to offboard approximately 12,000 employees—around 2% of its global staff—through FY2026. The retrenchment will primarily affect mid- and senior-level professionals, although a smaller number of junior employees who remain unassigned (or “on the bench”) for extended periods may also be impacted
Why the Layoffs? It’s About Skill Gaps, Not AI
In direct responses to speculation, CEO K. Krithivasan has firmly stated that the job cuts are not driven by artificial intelligence or cost-saving through automation. Instead, the decision is anchored in a “skill mismatch”—employees, particularly at senior levels, have struggled to transition into newer, technology-intensive roles despite widespread upskilling efforts.
TCS has invested heavily in training: over 550,000 employees received basic AI training, and more than 100,000 got advanced-level exposure. However, redeploying these employees into suitable roles has proven challenging, especially under the organization’s evolving operating model.
Operational Shifts and New Bench Policy
As part of a broader transformation, TCS is moving from traditional waterfall project management to a more agile, product-centric delivery model. This re-architecting has reduced the need for layered project or program managers, contributing to workforce reshuffling.
Additionally, the firm has implemented a strict new bench rule: employees must secure deployment within 35 bench days annually and meet a minimum of 225 billable days each year, failing which they risk losing their roles. This rule has created uncertainty and dissatisfaction across the workforce
What Support Will Be Offered?
TCS has pledged to handle the transition “in a very, very compassionate way.” Employees set for exit will receive compensation for their notice period, severance packages, extended insurance coverage, counseling, and outplacement assistance to ease their shift to new opportunities.
Industry Context and Market Pressures
Analysts view this move at TCS as emblematic of broader transformations in the Indian IT sector. As global clients demand 20–30% cuts in service pricing and embrace automation, firms are reevaluating their workforce models and gravitating toward efficiency and niche specialization in AI, cybersecurity, and data capabilities.
Brokerage houses like Jefferies warn that while the layoffs may preserve margin in the short term, they could cause long-term attrition spikes and morale challenges if not managed carefully
Looking Ahead
This restructuring marks a significant shift for TCS—historically lauded for its employment stability—underlining industry realities where automation, changing client needs, and evolving technology stacks are redefining workforce requirements. As TCS aligns itself with emerging demand and seeks future-ready agility, the layoffs signal a strategic pivot rather than a reaction to short-lived trends.