TCS Layoffs 2025: Inside the Largest Workforce Shift in India's IT Sector

Tata Consultancy Services (TCS), one of the world’s largest IT service providers, has made headlines in 2025 with the announcement of one of the most significant layoffs in its history. Around 12,000 employees—approximately 2% of its global workforce—are being let go in a strategic reshaping that reflects both the evolution of technology and global market pressures. This article explores the factors behind these layoffs, their impact on employees and the wider industry, and the future trajectory of TCS.

Background: TCS in the Global Spotlight

For decades, TCS has been a cornerstone of the Indian IT industry, employing over half a million people worldwide and driving digital transformation for clients across finance, healthcare, retail, and government. Its reputation for stability and job security has set it apart in an industry frequently tossed by cyclical demand and advancing technology.

However, 2025 brought a turning point. As the digital landscape shifted and economic pressures mounted, TCS initiated a major reorganization of its workforce, sending ripples through India’s job market and the global tech sector.

Why Did TCS Lay Off 12,000 Employees?

Several interconnected factors led to the downsizing:

• Declining Business Demand: The global IT service market saw a slowdown as clients postponed or scaled back digital projects, especially in sectors hard-hit by ongoing economic uncertainty.

• AI and Automation: Rapid advances in artificial intelligence and automation tools drastically reduced the need for manual and routine IT tasks, particularly impacting middle and senior management roles that traditionally oversaw large teams of developers and support staff.

• Skill Mismatch: As technologies evolved, many employees’ roles became obsolete or misaligned with the skills required for new cloud, AI, and cybersecurity projects. TCS emphasized its ongoing strategy to be a “future-ready organisation,” which, in practice, meant prioritizing employees able to shift into new roles.

• Restructuring for Agility: TCS has started shifting away from legacy "waterfall" project management toward agile and product-oriented models. This has reduced the need for multiple layers of oversight and leadership, further impacting mid- and senior-level staff.

Who Was Affected?

The layoffs chiefly targeted:

• Mid- and Senior-Level Managers: With increased automation, these roles became less vital, especially in large, hierarchical teams.

• Traditional IT Roles: Staff whose skills did not evolve with cloud, DevOps, and AI-driven workflows saw higher risk.

• Non-billable and “Bench” Employees: TCS introduced a stringent policy requiring a minimum of 225 billable days per year. Employees assigned to the “bench” (without a client project) for more than 35 working days faced adverse impacts on pay and job security.

How Did TCS Manage the Layoffs?

Showing a commitment to its workforce brand and India’s employment practices, TCS instituted several support mechanisms:

• Full Notice and Severance: Every laid-off employee was offered their full notice period pay and a generous severance package.

• Extended Insurance: Medical and life insurance coverage was temporarily extended beyond the layoff date.

• Outplacement Services: TCS assisted affected employees in securing roles at other companies, providing career counseling and resume workshops.

• Upskilling Initiative: CEO K. Krithivasan stressed that over 550,000 employees have already been enrolled in upskilling programs to better meet new business realities and avoid future redundancies.

Company and Industry Reactions

Krithivasan was emphatic: the restructuring is not just about cost-cutting or reducing headcount for short-term gain, but about “redeploying talent where it matters most.” Layoffs, he insisted, are based chiefly on skill alignment and redeployment feasibility—not merely to replace workers with AI or to cut expenses.

Yet the move has drawn criticism. Indian IT unions described the layoffs as “unethical” and alleged that TCS was prioritizing shareholder profits over worker livelihoods. Several groups have petitioned the Indian IT Ministry to order stronger employment protections, with some promising nationwide protests if the government does not intervene.

Policy Changes Fuel Unrest

One of the most controversial developments was the new billability mandate. The 225-day rule not only restricted time "on the bench" but also tied billable hours to promotions, bonuses, and job security. Critics argued that this increased anxiety, reduced flexibility, and punished workers for circumstances—such as project delays—that are often beyond their control.

Broader Implications for India’s IT Sector

TCS’s layoffs have set a precedent with cascading effects:

• Industry-wide Shift: Other major firms, including Infosys and Wipro, are reviewing their own labor policies to stay competitive.

• Talent Market Shakeup: The entry of 12,000 experienced IT professionals into the job market has increased competition, compressing wages for mid-tier roles and boosting demand for specialized skills in AI, cloud, and cybersecurity.

• Union Mobilization: For the first time in years, India’s white-collar tech unions are organizing for stronger employment guarantees, raising the specter of labor unrest in a sector previously shielded from such actions.

The Path Forward

As TCS moves forward, it faces the twin challenges of remaining commercially competitive and maintaining its reputation as a preferred IT employer. The company is betting big on:

• Aggressive Upskilling: Targeted training programs in GenAI, cloud architecture, and advanced security.

• Lean, Agile Teams: Smaller, more autonomous units focused on rapid product innovation.

• Improved Employee Communication: Greater transparency about business needs and training opportunities.

Employee Voices

Stories from departing employees are mixed. Some, especially those with outdated technical skills or unused management credentials, feel betrayed. Others see the layoffs as a needed wake-up call to accelerate their own careers through continuous learning and adaptability.

Government and Regulatory Response

India’s IT Ministry has launched an inquiry into mass layoffs, seeking to balance industry competitiveness with social stability. While the sector’s size and global importance may limit regulatory overreach, future rules might mandate more robust upskilling and redeployment options for laid-off tech workers.

Conclusion

The 2025 TCS layoffs are a watershed in Indian tech—reflecting both the danger and promise of a rapidly automating economy. For workers, the new era means embracing change as a constant; for companies, it means finding a sustainable path between technological progress and human impact. As the dust settles, TCS’s experience will shape workforce strategies and employment norms in India’s IT sector for years to come.