TCS Layoff Plan 2025: Unveiling the Massive Job Cuts Affecting 12,000 Employees Amid AI Disruption and Economic Shifts

Tata Consultancy Services (TCS), India's largest IT services company, has sent shockwaves through the tech industry with its announcement of a significant workforce reduction. The TCS layoff plan 2025 involves cutting approximately 2% of its global workforce, impacting over 12,000 employees, primarily in mid-level and senior positions. This move comes as the company aims to realign its operations to become more future-ready in a rapidly evolving digital landscape. As economic uncertainties and technological advancements like artificial intelligence (AI) reshape the IT sector, TCS's decision highlights broader challenges facing Indian IT firms. In this comprehensive analysis, we'll explore the details of the TCS layoff plan, its underlying reasons, the impact on employees, support measures provided, and responses from industry stakeholders. We'll also delve into long-tail aspects such as the TCS layoff plan 2025 impact on mid-level managers, TCS job cuts due to skill mismatch, and how the new bench policy is influencing TCS employee terminations.

Understanding the TCS Layoff Plan: Scope and Timeline

The TCS layoff plan was officially announced in July 2025, with the company stating it would reduce its workforce gradually over the financial year 2026 (FY26). At the end of June 2025, TCS employed 613,069 people worldwide, making this reduction one of the largest in the Indian IT sector's history. The layoffs are not a one-time event but will be phased, with a significant portion expected to occur in the current quarter. This strategic downsizing targets employees whose skills may not align with emerging demands, particularly in areas like AI, cybersecurity, cloud computing, and IoT.

  • Key Drivers: TCS's push for operational efficiency amid declining business demand.

  • Hiring Trends: The company has emphasized that these job cuts are part of a broader transformation to adapt to new market realities, including entering AI-driven markets and deepening partnerships.

  • Sector-Wide Context: For instance, the TCS layoff plan 2025 reasons include lower hiring rates across the top IT firms, with only 3,847 net additions in the April-June 2025 quarter a 72% drop from the previous period. This reflects a sector-wide slowdown, where global tech layoffs have already exceeded 80,000 in 2025.

Moreover, TCS has introduced stringent policies that could amplify the layoffs. The new bench policy limits non-project time to just 35 days annually, requiring employees to maintain 225 billable days. Employees on the bench for longer periods risk performance improvement plans (PIPs) or termination, raising fears that the actual number of TCS job cuts could surpass the announced 12,000. This policy particularly affects senior staff, who may take up to two months to secure new assignments, landing them in what employees describe as a "danger zone."

Reasons Behind the TCS Layoff Plan 2025: Skill Mismatch and AI Influence

While TCS CEO K Krithivasan has clarified that the layoffs are not directly due to AI replacing jobs for productivity gains, skill mismatch remains a core issue. "This is driven by where there is a skill mismatch or where we have not been able to deploy someone," Krithivasan stated in an interview. The company is investing in reskilling initiatives, but for some associates, redeployment isn't feasible. Broader factors include global economic uncertainties, political tensions, and AI-led technological changes disrupting traditional IT services.

  • AI Disruption: The TCS layoff plan 2025 due to AI disruption is evident in the industry's shift toward automation and product-aligned models.

  • Industry Insights: NASSCOM has noted that AI and automation are transforming operational methodologies, leading to transitions in workforce needs. TCS's decision aligns with this trend, as the company expands into AI and data services while facing resistance to its bench policy and delays in onboarding 600 lateral hires.

  • Criticisms: Critics argue this is profit-driven, especially since TCS isn't in financial distress. The announcement follows a freeze on salary hikes and senior-level hiring, signaling huge cost-cutting measures amid slow demand. Investors are concerned, with TCS shares dropping nearly 2% post-announcement, and the Nifty IT index plunging 24% in 2025. Jefferies warns that such moves could hurt employee morale and lead to higher attrition, similar to past cases at firms like Cognizant.

Impact of TCS Job Cuts on Employees and the IT Sector

The TCS layoff impact on employees is profound, especially for mid and senior-level staff who form the majority of those affected. Once viewed as a stable employer akin to government jobs, TCS now faces backlash for what unions call "inhumane" and "illegal" retrenchments. Senior techies and managers are sounding alarm bells, with fears of widespread job insecurity in the sector. The layoffs could exacerbate mental health challenges, as employees grapple with sudden transitions.

  • Sectoral Effects: On a sectoral level, the TCS layoff plan 2025 industry response has been mixed. Employee unions like the Forum for IT Employees (FITE) and Karnataka State IT/ITeS Employees Union have urged affected workers not to resign voluntarily and to seek legal recourse.

  • Global Trends: NITES has appealed to the Labour Minister to intervene, labeling the cuts unethical. The IT Ministry is monitoring the situation closely. Meanwhile, industry bodies like NASSCOM anticipate more transitions as firms pivot to AI-driven models. Globally, this mirrors trends where companies like Microsoft have cut over 15,000 jobs in 2025. For investors, it's a "canary in the mine," signaling potential margin pressures and growth challenges for Indian IT stocks.

Support Measures for Affected Employees in TCS Layoff Plan

TCS has committed to handling the layoffs compassionately, providing full notice period payments, severance packages, extended insurance benefits, outplacement assistance, counseling, and career transition support. "We will be making all efforts to provide appropriate benefits, outplacement, counselling, and support as they transition to new opportunities," the company stated. This includes HR outreach to discuss options and ensure no impact on client services.

However, some reports suggest a more abrupt process: affected employees are asked to resign immediately with three months' severance, or face termination without pay. Despite assurances, unions demand one-year insurance extensions and fair treatment. CEO Krithivasan's salary of Rs 26.52 crore in FY25 has drawn scrutiny amid these cuts, sparking debates on executive compensation fairness.

Reliable Reports and Long-Tail Insights on TCS Layoffs

Drawing from reliable reports:

  • The Economic Times highlights TCS's focus on becoming future-ready amid AI changes.

  • Times of India notes the bench policy's potential to inflate layoffs beyond 12,000.

  • MoneyControl and India Today emphasize skill mismatches and CEO statements.

  • Fierce Telecom discusses AI-driven industry shifts, while Financial Express covers viral employee reactions to the "horror" memo.

For long-tail keywords like TCS layoff plan 2025 severance package details, affected employees receive notice pay plus extras. On TCS job cuts industry response and unions, opposition is strong, with calls for reinstatement. The TCS layoff plan impact on senior employees includes higher risks due to bench limits.

FAQs on TCS Layoff Plan 2025

  • What is the TCS layoff plan 2025?
    The plan involves reducing 2% of TCS's global workforce, affecting about 12,000 mid and senior-level employees over FY26, due to skill mismatches and operational realignment.

  • Why is TCS laying off employees in 2025?
    Primarily due to skill mismatches, lower demand, and AI-led changes, not direct AI job replacement.

  • What support does TCS offer laid-off employees?
    Full notice pay, severance, extended insurance, outplacement, and counseling.

  • How does the new bench policy affect TCS layoffs?
    It limits bench time to 35 days, potentially leading to more terminations if employees can't secure projects quickly.

  • Is the TCS layoff plan legal, and what's the industry response?
    Unions claim it's illegal and profit-driven; the IT Ministry is watching, and NASSCOM expects sector-wide shifts.

  • Will TCS layoffs exceed 12,000?
    Fears exist due to the bench policy, but TCS states it includes all reductions.


Location: India

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