Tata Consultancy Services (TCS), the biggest IT services company in India, is planning to lay off 2 percent of its global employees over the 2026 financial period, which is estimated at 12,000 workers. The high-stakes restructuring presents an important milestone in the development of the India IT industry, worth $283 billion and heralds a wider transformation of the technology market.

Know about the TCS Workforce Reduction

The restructuring is expected to adversely affect around 12,000 staff members among a total of six million employees across the world working in TCS. K. Krithivasan, CEO, stressed that this comes along with the undertaking of a trying decision and that most of the middle and senior management jobs will feel the impact of the same and that it will be implemented gradually during FY26.

In contrast to the standard cost-cutting activities, TCS presents these cuts as a part of a strategic transformation and not a reaction to a decrease in demand. The company has registered promising Total Contract Value (TCV) levels, which means that the business perspectives are good.

Why Is TCS Cutting Jobs?

The primary drivers behind this workforce reduction include:

Skill Gap Challenges: The rapid evolution of technology, particularly artificial intelligence, has created mismatches between existing employee skills and market demands.

Operational Model Changes: Clients are shifting toward product-aligned models requiring greater agility and different skill sets than traditional waterfall project management approaches.

Deployment Feasibility: Despite extensive retraining programs affecting 550,000 employees (with 100,000 receiving advanced skills training), some staff members cannot be effectively redeployed to new roles.

Impact on Different Employee Levels

Middle and Senior Management Most Affected

Experienced non-technical managers will be the ones who get affected disproportionately by the restructuring. With program managers and project managers no longer seen as a traditional hierarchy, as TCS phases into more agile and product-oriented delivery mechanisms, the role of such positions loses its value as tracked in a traditional hierarchy.

According to Krithivasan, modern agile practices also involve fewer purely managerial positions since clients are more likely to bring their own leadership team to work on collaborative projects.

Junior Employees on Extended Bench Time

Although it is focused on the higher-level positions, it is a possibility that some junior employees will be terminated, too, after spending a long time on the bench (not assigned to any billable project). The recent revision by TCS to its HR policy is to give the minimum of 225 billable days in a year with the maximum bench time of 35 days.

Employee Support and Severance Benefits

Comprehensive Support Package

TCS has outlined several support measures for affected employees:

  • Severance Pay: Beyond standard notice period compensation, additional severance packages will be provided.
  • Extended Insurance Coverage: Health insurance benefits will continue for a specified period.
  • Outplacement Services: Professional agencies will assist with job search and career transitions.
  • Counseling Support: Mental health and career counseling services will be available.
  • Internal Opportunities: TCS will explore placement opportunities within other Tata Group companies.

Compassionate Implementation

The company emphasizes a gradual, compassionate approach to the process, avoiding mass terminations in favor of individual assessments and support throughout the year.

Broader Industry Implications

Setting a Precedent

As India’s largest IT employer, TCS’s decision may influence other major players in the sector. The move reflects industry-wide challenges, including: 

  • Client hesitation on non-essential technology spending.
  • Persistent inflation affecting project budgets.
  • Uncertainty around US trade policies.
  • Rapid technological evolution outpacing skill development.

Skills Evolution in Tech

This restructuring highlights the critical importance of continuous learning in the technology sector. Professionals must adapt to:

  • AI and machine learning technologies
  • Agile and DevOps methodologies
  • Cloud-native development practices
  • Product management approaches

What This Means for IT Professionals

Career Strategy Recommendations

Upskill Continuously: Focus on emerging technologies like AI, cloud computing, and modern development frameworks.

Embrace Agility: Develop skills in agile methodologies, cross-functional collaboration, and rapid prototyping.

Technical Depth: Even in managerial roles, maintaining technical relevance becomes increasingly important.

Domain Expertise: Combine technical skills with deep industry knowledge to remain irreplaceable.

Market Outlook

Despite these layoffs, TCS continues hiring for specialized roles, indicating that the issue isn’t reduced demand but rather skill alignment. The company’s $283 billion sector outlook remains positive for professionals with relevant capabilities.

Industry Expert Perspective

The TCS announcement reflects a broader transformation in how IT services are delivered. Traditional offshore development models are evolving toward more integrated, product-focused approaches that require different organizational structures and skill sets.

This shift doesn’t signal a decline in the IT sector but rather its maturation and adaptation to new market realities. Companies prioritizing reskilling and agile transformation will likely emerge stronger.

 

Opportunities Amid Challenges

While job cuts create immediate uncertainty, they also signal industry evolution toward higher-value services. Professionals who adapt to these changes may find enhanced career prospects in:

  • AI and automation implementation
  • Digital transformation consulting
  • Product development roles
  • Emerging technology specializations

Company Transformation

TCS’s decision, though difficult, positions the company for future growth in an increasingly competitive market. By aligning workforce capabilities with market demands, the company aims to strengthen its position as a technology leader.

Final thoughts

TCS workforce reduction will not only be seen as the job-slashing scenario but also as the significant change in the way the IT services firms do business. Although it is quite a difficult process to influence affected employees, this transformation signals the movement of the industry toward more and more specialized and high-value services.