TCS Mass Layoffs: Is Ai Taking Away Jobs of 12,000 Employees? Here's What CEO Krithivasan Says

India's leading IT exporter, Tata Consultancy Services (TCS), plans to reduce its workforce by approximately 2%, equating to over 12,000 employees, due to ongoing macroeconomic challenges and disruptions from AI technology. By the end of June, TCS employed 613,069 individuals. The company aims to become a future-ready organisation and will release associates whose deployment is not feasible.

"TCS is on a journey to become a future-ready organisation… As part of this journey, we will also be releasing associates from the organisation whose deployment may not be feasible. This will impact about 2% of our global workforce, primarily in the middle and the senior grades, over the course of the year," the IT giant said in a statement to Economic Times.

Impact on Employees

The layoffs will mostly affect middle and senior-level employees, along with some entry-level associates who have been on the bench for extended periods. TCS has assured that service delivery to clients will remain unaffected during this transition. The company acknowledges the challenging times for affected colleagues and expresses gratitude for their service while pledging support through benefits and counselling.

The affected employees will receive payments for their notice periods along with an additional severance package. TCS will also look to extend insurance benefits and offer outplacement opportunities for the impacted employees. The layoff decision comes days after several TCS employees filed legal complaints against the company's recently tweaked employee bench policy, which allows employees only 35 annual days without being deployed on a project and to maintain at least 225 billable days annually.

Reasons Behind Layoffs

TCS CEO K Krithivasan clarified that these layoffs are not due to AI-driven productivity gains but rather skill mismatches or deployment feasibility issues. "No, this is not because of AI giving some 20 percent productivity gains. We are not doing that. This is driven by where there is a skill mismatch, or, where we think that we have not been able to deploy someone," he stated in an interview with Moneycontrol.

Krithivasan further explained that despite training many individuals at various skill levels, some senior personnel might not utilise entry-level skills effectively. "We trained a lot of people. We have trained about 550,000 people at the initial skills, 100,000 at the advanced skills," he noted.

Support Measures for Affected Employees

TCS has committed to providing notice period pay along with an additional severance package for those impacted by the layoffs. Additionally, they plan to extend insurance benefits and offer outplacement opportunities as part of their support measures during this transition phase.

India's software services sector generates over $283 billion in revenue collectively and stands as one of the largest private-sector employers globally. Within this landscape, TCS holds its position as India's largest IT exporter.

The company remains focused on acquiring high-quality talent while continuing training initiatives despite these job cuts aimed at addressing deployment feasibility issues rather than reducing overall headcount needs.