Why TCS Laid Off 12,000 Employees

Welcome to StayInform in today’s article, we will see why TCS laid off 12,000 employees? Tata Consultancy Services, TCS has made a shocking announcement for all IT workers and said that 12,000 IT workers will be laid off this financial year. This is surprising because the entire sector is already going through a lot of pain. Many people have already lost their jobs, new jobs are not being created and existing workers are also being laid off.

Why TCS laid off 12,000 employees?

As you can see in this news, TCS layoffs, IT employee unions are expressing their dissatisfaction over the layoff of 12,000 employees. We will understand it in detail, what is happening, why TCS has taken this decision and what is happening with the rest of the companies. I will tell you everything about TCS’s revenue and net profit in the last few years.

What exactly happened.

You all know that TCS is India’s largest IT services company. They have officially announced that they will lay off 2% of their total workforce between April 2025 and March 2026. They will lay off 2% of their total workforce.

AI Storm

This means that TCS has a workforce of around 6,13,000. So, a 2% cut means that 12,000-13,000 employees can get jobs. But the question here is, why did TCS take such a big decision? First of all, you all know that there is an AI storm going on in the world.

The way AI is moving towards automation, obviously, if you don’t upgrade yourself, if you don’t upgrade your skills, then of course you will become irrelevant and lose your job. First of all, I want to tell you that TCS is aggressively implementing AI, machine learning in its service delivery, operations and internal processes. So, obviously, what used to be manual, repetitive, supervised work, means jobs are being replaced by automation tools and AI-powered platforms.

For example,

Software testing, report generation, project tracking, all these things can be done by AI bots. Earlier, this was not possible. Earlier, you needed a human for this.

So, because of this, there is a big concern that the way AI is growing rapidly, many jobs will be lost in the future. Because, obviously, companies work with a profit motive, they work to increase their profit margins. The second reason is the changing business model.

Pyramid Model

TCS used to follow the pyramid model. In the pyramid model, the juniors are at the bottom. And they are more in number.

The middle and senior managers are less in number. Like at the top level, there are very few people. But now the model is changing.

Now The Diamond Model

What is the model? It is basically a diamond model. Diamond is something like that. This means that in this structure, there will be fewer employees at both the bottom and the top, meaning the top and the bottom.

And the middle, the centralized part, here skilled professionals, who will work with AI advanced tools, will be seen more. So, there will be fewer at both the bottom and the top levels.

Earlier, there was a pyramid structure where freshers would pass.

They studied from IITs. So, they got good jobs. And there were a lot of people here.

Now, the situation is changing a lot. So, this change, from manpower-intensive legacy model to agility, automation, efficiency. We are now moving in this direction.

Global Demand

Of course, in the entire world, where do companies like TCS and Infosys export? In the western countries, in Europe, in the US, most of their revenue comes from TCS.

So, obviously, if there is a recession in countries like the US and Europe, will TCS invest or not? Because what is happening in the US and Europe, there is a fear of recession. Interest rates are high. There is political uncertainty.

Just like Donald Trump is talking about tariffs. And because of that, new projects are coming. Be it banking, insurance, retail, telecom sector.

What Does TCS Do?

Now, what do TCS and Infosys do? They provide services. If there is a recession in banking, insurance, retail, telecom sectors, you will see its direct impact on IITs. So, I hope you understand this point.

Cost Optimization

And the fourth obvious point is cost optimization. Every company goes towards cost optimization. The maximum cost has to be reduced.

Because there is a lot of pressure on profit margins. Along with this, the role of high salaries in middle and senior management is also being reduced. Because here the wage bill has increased a lot.

Campus Recruitment Plan

And at the same time, TCS is planning to recruit on campus. What happens if you recruit on campus? The cost comes down. I mean, today’s new age people, students who have passed out from IITs and other places, they have a lot of talent.

How to use AI etc. So, they hire at a low cost and their work also goes ahead. Young and talented, trainable talented people.

Who Will Be The Most Affected?

So, they are going towards cost cutting, which is why this big decision has been taken. Now the question is, who will be most affected by this decision of TCS? It is being said that the middle and senior management, like project leads, delivery managers, client engagement heads, will be most affected by all concerned. And the employees who were not involved in active projects for a long time, for the last 3-6 months, they were just managing themselves in the company.

So, their jobs may go. And the employees whose skills here are outdated, who have not upgraded themselves with cloud, AI, cyber security, their jobs may go. And it will have a global impact as well.

What Is Being Done For The Affected Employees?

India, US, Europe, everywhere you will see a reduction in the number of employees here. Now, the question is, what is TCS doing for the affected employees? TCS has announced many measures, like out-placement support, which means, TCS will help people who will lose their jobs, if there are vacancies in their partner companies, they can be hired there. Then there is emotional and career counselling, which will try to provide the affected employees, which is counselling services.

And TCS is also trying, new age skills, if an employee is going for a job, and he upgrades himself with cloud, AI, block chain, then TCS can bring him back there. So, that is also being said. But no financial package, or any kind of details have been released yet.

Margins Are Also Continuously Declining

In fact, if I tell you, if you look at TCS’ performance in recent years, talk about revenue growth, talk about net profit margin, it has been continuously declining. In the financial year 2022 and the financial year 2023, the revenue growth was 17.6%. In 2023-2024, it has declined by 10.3%. And this time, it is estimated to be around 7%. The net profit margin is also continuously declining.

And here, in 2023-2024, the work started by TCS. And now, the 2% cut, the impact of which will come. But new jobs, not like that, the old jobs have not been replaced yet.

That is, the number of new hires here is very low. You have to understand that. If we look at the industry-wise trends, TCS is not alone.

If you look at the major Indian IT players, you will see restructuring everywhere. Infosys recently laid off 10,000 people. Due to automation, low demand, which is currently happening in various sectors.

Wipro has also laid off about 8,000 people. Cost cutting, skill redeployment. HCL is done, that hiring has slowed down.

AI migration is going towards global delivery. Beyond that, Cognizant was laid off, more than 3,500 people were laid off. Profitability is important for this.

Conclusions

So, you will see a change in a lot of things. If we talk about the future outlook, what can you say positively? TCS is trying to grow more with fewer people. But with skilled workers.

This means that if you have the skills, you won’t have any problems. You have to focus on productivity. But the downside here is that the morale of the people already employed will be broken.

Biggest Layoff: Why TCS Laid Off 12,000 Employees?

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