Tata Consultancy Services (TCS) CEO and MD K. Krithivasan addressed concerns over the 2% workforce reduction (about 12,000 jobs) in FY 26, clarifying that the layoffs are not a result of AI automation or productivity gains. Instead, the move is driven by a skill mismatch and challenges around redeployment:
“This is not because of AI giving some 20% productivity gains… This is driven by where there is a skill mismatch, or where we think that we have not been able to deploy someone.”
Even after training over 550,000 employees in foundational skills and 100,000 in advanced AI, senior professionals have often lacked feasible redeployment paths due to model shifts and changing client demands.
📊 Layoff Details at a Glance
| Aspect | Details |
|---|---|
| Layoff Size | ~12,000 employees (~2% of global headcount of ~613,000) |
| Target Roles | Mainly mid- & senior-level; some long-standing bench staff |
| Reason | Skill misalignment and inability to deploy certain roles |
| AI Role in Layoff | Not a direct driver—cost savings from AI were not cited |
| Support Measures | Severance pay, extended insurance, outplacement & counseling |
🔍 Why It Matters
- Separating Myth from Reality
Krithivasan emphasized that AI-generated productivity gains—estimated at ~20%—did not trigger layoffs. It’s about role feasibility, not workforce replacement. - Evolving Operating Models
The transition away from waterfall and program-centric structures to product-aligned, agile delivery reduces the need for traditional program managers. Senior staff lacking deployable digital skills become less aligned with client requirements. - Skill Gap Risks for Senior Staff
Leaders trained at level‑1 or level‑2 digital skills found it challenging to pivot to advanced roles—especially in technology-heavy accounts—causing persistent deployment gaps.
🧭 Broader Industry Insights
- The move marks the largest layoff in Indian IT history, highlighting intensifying structural challenges amid evolving service-model dynamics.
- Analysts warn the layoffs underline weakening demand, margin pressures, and the broader impact of digital transformation on legacy services. Hindustan Times
🔮 Outlook & Takeaways
Looking ahead, TCS will continue retraining and hiring targeted talent aligned with its future-readiness roadmap. While this is a difficult transition, the firm insists it remains focused on client delivery and strategic agility, not workforce reduction as cost leverage.
The message is clear: the layoffs signal a shift in role relevance—not an AI takeover—with near-term implications for mid- and senior-level professionals in India’s broader tech workforce.
