TCS to Lay Off 12,000 Amid Skill Mismatch and Organisational Restructuring, Not AI Disruption

TCS will lay off 12,000 employees over FY26, citing skill mismatches and structural changes—not AI disruption. The decision targets mid- and senior-level staff amid a shift to agile operations. CEO K Krithivasan assured support for affected employees, including severance, health cover, and mental wellness assistance.

Tata Consultancy Services (TCS), India’s largest IT services firm, has announced plans to lay off approximately 12,000 employees — nearly 2% of its global workforce — over the next three quarters of FY26. Contrary to widespread speculation, the move is not driven by artificial intelligence displacing human roles.

CEO and MD K Krithivasan clarified in a recent interview that AI advancements are not the root cause of the restructuring. “This is not because of AI giving some 20% productivity gains. We are not doing that,” he said. The layoffs are instead the result of skill mismatches and deployment challenges, especially among mid- and senior-level professionals.

TCS has made extensive efforts to upskill its staff, training over 550,000 employees in basic AI and over 100,000 in advanced AI skills. However, the company admitted that a gap remains between training and actual redeployment, particularly for those at senior levels struggling to transition into more tech-intensive roles.

Another factor contributing to the downsizing is TCS’s shift from the traditional “waterfall” project management model to a more agile, product-centric approach. This operational transformation reduces the need for multiple layers of project and program management, leading to redundancy in some leadership roles.

Krithivasan acknowledged the difficulty of the decision, assuring that the process would be conducted with empathy. Affected employees will receive comprehensive support, including severance packages, extended health coverage, mental wellness services, and career transition assistance.

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The layoffs are not restricted by geography or domain and reflect a broader strategic pivot aimed at improving organisational agility and long-term competitiveness in a changing tech landscape.