AI Reason Behind TCS Laying Off 12000 Employees? CEO Comments Suggest Yes And No

Tata Consultancy Services (TCS), one of India’s largest IT firms, has decided to let go of 2 percent of its global workforce. That number seems small on paper until you figure that TCS employs close to 6,13,000 people across its many offices spanning multiple geographical locations. A 2 percent reduction therefore amounts to a sizeable 12,000 employees in line to get the dreaded pink slip. TCS plans to hand them out through the course of FY 2026 (April 2025 to March 2026), it is learnt. Reports say, the layoffs will mostly impact mid- and senior-level employees though the division or department-wise impact remains unclear at the time of writing. The news was confirmed by CEO K. Krithivasan himself in an interview with Moneycontrol.

While speculation quickly linked the layoffs to AI use, Krithivasan, has pushed back on the idea that “AI giving some 20 percent productivity gains” was the reason behind taking such a big step. Instead, he has attributed the decision to a “skill mismatch” and a lack of “deployment feasibility” for certain roles, particularly among those accustomed to legacy project-management and waterfall models of work. “We have been calling out new technologies, particularly AI and operating model changes. The ways of working are changing,” Krithivasan said emphasising that TCS is on a journey to become a “future-ready organisation” and it would require a leaner, more product-aligned workforce to get there.

Krithivasan has acknowledged that TCS did try to upskill its employees. The drive to teach them new, future-forward ways to work and streamline operations in fact is said to have been massive, with over half a million employees, getting training in basic and advanced AI and other unspecified emerging technologies. While not explicitly confirmed, it is likely to have incurred some cost to the company. It seems not all employees could learn, adapt, and realign themselves to the evolving structure. “Still, we find that there are roles where redeployment has not been effective. It has not been an easy decision and one of the toughest decisions I have had to take as CEO,” Krithivasan said while announcing the layoffs.

Still, you can’t rule out the impact of AI on jobs at TCS entirely. Yes, you must read between the lines, but the signs are all there once you start paying close attention to what he is saying. Krithivasan’s comments clearly link the cuts to the need for employee skills compatible with a new, AI-driven operational model, the company is pursuing. The “ways of working are changing” due to new technologies, implicitly including AI, which demands a different set of competencies. The company’s focus on a “future-ready” and “agile” structure, buoyed by its significant investment in AI, suggests a strategic realignment where conventional roles may simply no longer fit, the extent of which would be defined by TCS.

Industry experts have opined that the wheels are already in motion. They have been for some time. We can see some of the changes for ourselves. In the age of vibe-coding and AI agents doing much more than just assisting in simple code correction, to making complete apps and websites through prompts all in matter of minutes, client projects are increasingly becoming smaller and shorter, with companies pushing software service providers to leverage AI for greater efficiency. Skills like conventional testing, for instance, are rapidly declining in relevance as AI tools automate many of these tasks.

Companies themselves are using AI for both routine and often complex tasks. Within Big Tech companies like Google, Microsoft, and Salesforce, AI is writing up to 50 percent code, something which was once part and parcel for humans they would hire with big payrolls and attractive perks. This naturally reduces the need for having large teams. Amazon CEO Andy Jassy recently told employees that they must brace themselves for cuts across the organisation singling out AI as the biggest reason behind the change in gears. It is possible that some senior employees, might show resistance to adapting to this new landscape, further exacerbating the skill mismatch Krithivasan cited.

“It’s a difficult call we have to take to build a stronger TCS,” he said, assuring that the company is striving to make the process as compassionate as possible. While the official stance carefully stirs away from AI as the elephant in the room, the broader context underscores and positions it as one of the major catalysts for this structural shift. As such, the layoffs appear to be less about direct AI displacement and more about a strategic recalibration of the workforce to meet the demands of an increasingly AI-centric future in IT services. The message is loud and clear: quickly adapting to new technologies will be critical for survival in the evolving industry. It is, as it has always been, all about survival of the fittest.