IT Giant Tata Consultancy Services, Leading IT Services Provider in India, to Eliminate 12,000 Jobs
Tata Consultancy Services (TCS), one of the world's largest IT services companies, has announced plans to reduce its workforce by approximately 2% during the financial year 2026. This equates to around 12,200 jobs.
The decision is primarily driven by the need to address skill gaps, improve deployment feasibility under new policies, respond to client delays, and align the workforce with evolving technological and business models. It's important to note that this decision is not directly due to AI automation, but rather part of TCS's journey to become a future-ready organization with a leaner, more product-aligned workforce.
Many employees, particularly those in middle and senior roles, have skills that do not match current project requirements, especially as the company transitions to newer technologies and ways of working. This includes challenges in adapting from legacy project management models to more modern, product-aligned approaches.
Despite extensive reskilling efforts, TCS has been unable to effectively redeploy all trained employees to suitable projects. Over 5.5 lakh employees have been trained in digital skills, but some roles remain unfeasible to deploy.
TCS has introduced stricter policies requiring employees to maintain at least 225 billable days per year and limiting time on the bench to 35 days. Non-compliance with these policies could lead to possible termination, contributing to the workforce reduction.
The challenges in the IT sector may be impacting TCS, as suggested by the delays in client decision-making and project starts. Weak demand, persistent inflation, and lingering uncertainty over US trade policies could be factors in these challenges.
In response, TCS is not only retraining and redeploying staff but also investing in new technology and entering new markets. The exact locations of these new markets are not specified. The transition is planned with due care to ensure no impact on service delivery to clients.
The IT sector in India, valued at $283 billion, is facing challenges due to clients holding back non-essential technology spending. These challenges could potentially affect TCS's business. The delays in client decision-making and project starts could be a reason for TCS's deployment of AI as part of its strategy.
TCS Chief Executive K Krithivasan stated that there are delays in client decision-making and project starts this month. He emphasized that the company is committed to navigating these challenges and emerging stronger.
In conclusion, TCS's workforce reduction in 2026 is a strategic move aimed at ensuring the company remains competitive in the rapidly evolving IT landscape. The company is taking steps to reskill and redeploy employees, invest in new technology, and enter new markets to mitigate the impacts of the current challenges in the IT sector.
- Despite the extensive reskilling efforts, some employees' skills remain outdated due to the transition to newer technologies, such as artificial intelligence, within the business sector, leading to deployment challenges.
- To remain competitive in the fast-paced IT landscape, Tata Consultancy Services is actively investing in technology, incorporating AI where necessary, and exploring new markets as part of their strategic plan, in addition to retraining and redeploying their workforce.
