TCS Lays Off 12,000 Employees — All Details Here

Tata Consultancy Services (TCS) has decided to slash 2% of its workforce, impacting 12,261 employees. This will largely target those belonging to middle and senior grades. Following the reports, TCS shares not only tumbled but also triggered ripple effects across other IT companies. Shares of Wipro, HCL Technologies and Infosys were down by over 2%, leading to decline in Nifty IT pack down over 1%.

What’s the reason behind TCS layoffs?

According to analysts, the TCS layoffs are part of deep organisational changes driven by artificial intelligence (AI) and slowing global demand, rather than a short-term cost-cutting measure.

“TCS’ decision to layoff ~12,200 employees, which is ~2% of its global workforce during FY26 is reflation of both cost optimisation measures and deeper industry challenges. Shifting technology demands can be also a major reason for the layoff,” said Rajesh Sinha, Sr. Research Analyst at Bonanza.

Though TCS has indicated that the layoffs are not an immediate result of AI or immediate cost-cutting, Sinha highlighted that there is significant pressure to stay competitive amid tighter client budgets, demand softness and rising price pressures requiring efficiency improvements.

“Growing requirement of automation and evolving client expectations are reshaping workforce structures, forcing companies like TCS to rebalance employee costs and skill sets to maintain margins and becoming “future-ready” through skill re-alignment,” said Sinha.

In the June quarter, Indian IT companies had single-digit revenue growth.

TCS reported a revenue of ₹63,437 crore, up 1.3%, missing analysts’ average estimate of ₹64,666 crore, LSEG data said. Revenue in the company's four out of its six verticals fell against the same period last year. Revenue in banking and financial services grew by 1% respectively.

Will layoffs impact the IT sector?

Dasani said that performance and profitability will now take precedence over headcount growth now.

“It challenges the long-standing perception that Indian IT offers unconditional job security, and it underscores that operating leverage, not just revenue growth, will define sectoral winners in this cycle. Other firms may follow suit, especially as pricing pressure and AI-led delivery transformation gather pace,” he added.

Sinha believes that TCS layoff is expected to increase fears of job insecurity not only in TCS but also across other IT companies, highlighting long-term career stability in the IT industry.