TCS to Lay Off Over 12,000 Employees Globally by FY26 Amid Strategic AI Realignment

In a significant restructuring move, Tata Consultancy Services (TCS) has announced that it will lay off approximately 2% of its global workforce, translating to around 12,200 employees, by the end of fiscal year 2026. This decision reflects the company’s strategic shift toward large-scale AI adoption, evolving client demands, and operational agility in the face of a rapidly transforming digital economy.

TCS CEO K. Krithivasan, speaking to Moneycontrol, confirmed that the layoffs will primarily impact employees at the middle and senior levels, across various geographies and business units. The company, headquartered in Mumbai, currently employs over 613,000 professionals as of the June 2025 quarter.

“This will impact roughly 2% of our global workforce, primarily at middle and senior levels. It has not been an easy decision and is one of the toughest decisions I have had to take as CEO,” said Krithivasan.

AI Is Reshaping TCS’s Business and Operating Model

This development comes as TCS aggressively embraces artificial intelligence, machine learning, and digital platforms to build the next generation of IT services. The company has already begun deploying AI at scale, prompting a reevaluation of roles, skill requirements, and project delivery models.

Krithivasan emphasized that while TCS has made considerable investments in reskilling and upskilling initiatives—an area the company has traditionally prioritized—some roles are no longer viable in the context of the company’s evolving business needs.

“We are entering a new era of delivery, where automation, AI integration, and adaptive workforce models are at the center of how value will be created and delivered,” Krithivasan added.

Workforce Optimization and the New IT Economy

TCS’s move reflects a broader trend in the global technology sector, where companies are rethinking traditional workforce structures amid AI-led disruption. As technology becomes more intelligent and automated, the industry is witnessing a growing demand for AI architects, prompt engineers, data scientists, cloud specialists, and other future-ready roles, while legacy functions are being phased out or restructured.

The layoff decision is part of a multi-year transformation plan focused on:

• Modernizing delivery frameworks through AI-first processes

• Aligning talent with next-generation technologies

• Streamlining leadership layers and decision-making processes

• Enhancing agility and responsiveness to global client needs

This marks one of the most significant shifts in TCS’s workforce strategy in more than a decade.

Geographic and Departmental Impact

While TCS has not publicly disclosed the exact geographies or departments affected, it is expected that the layoffs will be distributed across North America, Europe, and Asia-Pacific markets, along with domestic locations in India.

The impact is likely to be most visible in departments where:

• Projects are being automated through AI

• Mid-level managerial roles are overlapping due to leaner delivery models

• Demand for emerging skills like GenAI, DevOps, cybersecurity, and digital transformation outpaces current talent availability

Industry Implications: Is This the Start of a Broader Restructuring Wave?

TCS’s decision is being closely watched across the Indian IT industry, which employs over 5 million professionals and contributes significantly to the country’s export and GDP figures. If one of the most stable and conservative employers in the sector is initiating such changes, it may signal the beginning of a broader industry reset.

Experts believe that Indian IT firms will increasingly be forced to balance AI-driven efficiency with human adaptability, especially as clients demand faster, cheaper, and more innovative solutions powered by automation.

According to industry analyst reports, many traditional IT roles such as L1 support, testing, and documentation are already being augmented or replaced by AI. The challenge now lies in future-proofing the workforce through continuous learning, adaptability, and high-demand specializations.

TCS’s Commitment to Reskilling and Internal Mobility

Despite the layoffs, TCS reiterated its long-standing commitment to internal talent development. The company has previously been recognized for initiatives like:

• TCS Elevate: a program that enables employees to move up the value chain by acquiring digital and domain-specific skills.

• Ignite: a cloud and AI readiness platform for campus recruits and junior professionals.

• Xplore: a skill-certification program to identify high-potential employees for leadership grooming.

While these programs continue, Krithivasan admitted that reskilling alone may not be enough to protect all jobs in an economy that is moving faster than ever toward intelligent automation.

Final Thoughts: A Defining Moment for the Future of Work in IT

This announcement from TCS marks a critical juncture in the ongoing evolution of the global IT workforce. As organizations retool their operating models around AI and cloud-native solutions, efficiency, scalability, and innovation are becoming non-negotiable.

For employees, this is a call to action to acquire AI fluency, business acumen, and adaptability. For companies, it’s a reminder that even a strong brand like TCS must make difficult choices to stay ahead in the new digital frontier.

The next few quarters will likely determine how successfully TCS—and the broader Indian IT industry—manages this delicate transition from human-heavy delivery models to AI-augmented service ecosystems.

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