After Microsoft, TCS is now set to lay off 2% of its workforce due to AI and changes in its operational models. TCS has a total employee headcount of roughly 6,13,000, so the layoffs will affect a total of 12,200 employees.
TCS CEO K Krithivasan has clearly stated that the layoffs will take place as the company embraces AI and other new technologies. He said that the downsizing will specifically target middle and senior-level positions.
K Krithivasan said, “We have been calling out new technologies, particularly AI and operating model changes. The ways of working are changing. We need to be future-ready and agile. We have been deploying AI at scale and evaluating skills we will be requiring for the future. We have invested a lot in associates in terms of how we can provide them with career growth and deployment opportunities. Still, we find that there are roles where redeployment has not been effective. This will impact roughly 2 per cent of our global workforce, primarily at middle and senior levels. It has not been an easy decision and one of the toughest decisions I have had to take as CEO.”
He further added, “It’s a difficult call we have to take to build a stronger TCS”
Krihivasan also pointed out that TCS was working to streamline the process in a compassionate manner. But when asked again, whether the reduction of employees was happening because of AI-driven productivity or actual demand. He said, “This is not because of AI but to address skills for the future. This is about feasibility in deployment, not because we need fewer people.”
How are the TCS employees reacting?
As per reports, TCS has mentioned that it will provide notice period pay and an extended severance package to the employees affected. In addition, it will consider added insurance benefits and outplacement opportunities during the layoffs.
An employee with more than four years of experience impacted by the downsizing has shed light on the situation: “They are removing all the people who have been on the bench for more than 2 months. First, they are allocating an HR person to each employee to meet in person. On meeting them, they will ask the employee to resign immediately and they will get around 3 months ‘ salary in severance pay.”
This happened after TCS changed its employee bench policy a few weeks back. The new policy said that employees were required to have at least 225 billable days in a year, and the “on the bench” period was made less than 35 days.
The employee further added, “If they don’t oblige, they will get terminated by the company and won’t be eligible to get the severance pay also.”
As per Moneycontrol, employees received an email immediately after submitting the resignation letter.
Project cancellation and delays from Clients
After Microsoft laid off thousands of employees due to AI transformation, some people argued that AI-led restructuring might not affect Indian service-based Companies. But these lay-offs tell a different story. TCS is an Indian company, headquartered in Mumbai, with over 80% of its workforce based in India. Though the exact number of Indian employees affected is unknown at the moment.
Analysts contribute a reduced number of client projects because of AI as the main reason for this outcome. Traditional skills like testing are becoming irrelevant, and employees resisting AI are some other reasons mentioned for the recent development.
General Secretary of AIITEU, Saubhik Bhattacharya, said, “TCS has also delayed onboarding of at least 500 lateral hires who were issued offer letters and were due to join in June-July 2025.”
TCS CEO Krithivasan revealed there were ‘delays’ from the client’s side and the cancellation of projects. He said, “There were very few cancellations; it was more delays or scope reduction. In some places where you expected the project to be finalised and start the work, there were decision-making delays,” adding, “It’s not an efficiency drive. We want to ensure associates are able to seek projects and ensure that they remain productive through the year.”
Is TCS’s new policy a drastic shift from its previous policy?
TCS implemented a change to its bench policy for employees, effective June 12, 2025. A remarkable shift from the old policy, where employees could remain on the bench unassigned for months and still receive a salary.
The new bench policy requires employees to actively seek projects from the Resource Management group of the company. Employees must ensure that they fulfil the 225 days of billability during a period of 12 months. Employees are liable to face disciplinary action, including firing, if they do not achieve the billability target.
Further, the bench policy also mentioned that employees cannot remain on the bench for more than 35 days a year. The lay-offs will take place through the fiscal year of 2026, that is, April 2025 to March 2026, across several countries.
