Tech company TCS to dismiss 12,000 workers due to AI unpredictability
In a move that reflects the broader challenges being faced by the IT sector, Tata Consultancy Services (TCS) has announced plans to lay off around 2% of its workforce, approximately 12,000 employees, in 2025. The layoffs, which began in the first half of July 2023, are primarily due to global economic uncertainties and the rapid adoption of artificial intelligence (AI) technologies that are changing the nature of IT service delivery.
The company, which is focusing on investments in technology, AI deployment, market expansion, and workforce realignment as part of its strategy to become a "future-ready organization," has described this reduction as a necessary step to streamline operations and adapt to AI-driven technological changes that impact deployment feasibility of certain roles.
The layoffs will mainly affect mid-level and senior management employees globally, with hundreds of employees, particularly those in the 24-55 age group from Bengaluru, London, and Princeton, already being asked to leave. Some employees with work from office (WFO) index issues are also being released from the organization.
TCS CEO K. Krithivasan has stated that the layoffs are due to a skill mismatch, not AI productivity gains. The company is intensifying its upskilling efforts to meet the demands of AI, and the EEOC is currently probing TCS for discrimination allegations.
The impact of AI on these job cuts is significant. AI-driven automation and digital transformation are reshaping how TCS delivers technology services, reducing reliance on human labor especially in repetitive or mid-management roles. While the company claims this is a strategic move to remain competitive and invest in AI, cloud, and digital skills, it also reflects broader industry trends where AI adoption is leading to workforce restructuring.
The industry body Nasscom predicts that India needs a million AI professionals by 2026, but only 20% of IT professionals are AI-skilled. Rishi Shah, economist with Grant Thornton Bharat, suggests that AI is forcing businesses to reassess their workforce structure.
Analysts suggest that companies are pausing on discretionary IT spending due to tariff uncertainties and global sourcing strategy reconsideration. The U.S-based demand for IT services has been impacted by President Donald Trump's tariffs.
TCS has committed to supporting the impacted employees through notice period compensation, severance benefits, extended insurance coverage, outplacement assistance, and counseling to aid their transition. The company's layoffs reflect the structural shifts being experienced by the IT sector due to the advent of AI.
In summary, TCS's 2025 layoffs stem from economic pressures combined with AI transforming IT service models, resulting in a workforce reduction focused on mid to senior-level employees to make the company future-ready while offering support to affected workers. The layoffs are part of a broader trend in the IT sector where AI adoption is leading to workforce restructuring as companies strive to remain competitive and invest in AI, cloud, and digital skills.
- Despite investing in technology and AI deployment, TCS has had to make the difficult decision to lay off 12,000 employees in 2025, as global economic uncertainties and AI-driven technological changes are impacting the feasibility of certain roles in the business sector.
- The rapid advancement of technology, particularly AI, is causing a significant shift in the IT industry, necessitating workforce restructuring as companies like TCS adapt to these changes and strive to remain competitive by investing in AI, cloud, and digital skills.
