Macro Uncertainties and Industry Shifts Drive Largest Workforce Reduction at Tata Consultancy Services

Mumbai, July 28, 2025 Tata Consultancy Services (TCS) is preparing to lay off 12,000 employees. This is the largest workforce reduction in the company’s history. The layoff represents about 1.1% of TCS’s total workforce. It highlights a major strategic shift for the IT giant amid growing macroeconomic uncertainties and evolving industry trends. The company cited increased reliance on automation, artificial intelligence (AI), and cloud technologies. These factors are reducing the need for human intervention in mid-level roles.

Industry experts call this phase a “people heavy cooling” period. Margin pressures and shifting client demand are forcing IT firms to rethink workforce strategies. TCS’s move reflects a wider trend in the sector. Companies are shifting from traditional hiring to reskilling existing staff. They are also restructuring teams to improve digital service delivery.

TCS’s CEO K Krithivasan acknowledged the tough environment and emphasized supporting employees through the transition. “We are committed to guiding our workforce during this period of change,” he said.

The retrenchments exceed TCS’s previous cuts. For example, in FY15, it laid off 4,500 employees, with fewer cuts in later years. This time, the scale reflects both external market pressures and TCS’s internal transformation to a future-ready organization.

Phil Fersht, CEO of HFS Research, said AI is reshaping the IT services labor model. Companies must balance workforce size while maintaining margins amid competitive pressures.. “This marks a pivotal moment as automation eats into people-heavy services,” he explained.

Additionally, Tata Communications and Tata Tele Services are reassessing headcount strategies. This follows recent regulatory rulings on telecom dues and service license liabilities. These changes indicate wider restructuring trends within the Tata Group.

This TCS workforce reduction is seen as an early sign of broader IT sector shifts. Firms are navigating automation, cost control, and changing client expectations.

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