India’s largest IT services firm, Tata Consultancy Services (TCS), has announced plans to reduce its workforce by 2 percent in the financial year 2026. The move, which will affect approximately 12,200 employees—mainly from middle and senior management—signals a strategic restructuring effort in response to shifting market dynamics and accelerated adoption of artificial intelligence (AI).
This development comes at a time when the $283 billion Indian IT industry is facing global economic headwinds, project delays, and a slowing demand for traditional IT services, especially from major clients in North America and Europe.
Realignment with AI and Market Evolution
TCS’s job reduction is part of a broader internal transition focused on technology modernization and operational agility. The company has already initiated programs to retrain and redeploy employees to meet the evolving demands of AI and digital service delivery. With AI expected to reshape service models across industries, TCS is positioning itself to offer higher-value services, reduce delivery costs, and remain competitive globally.
While the company has assured that service delivery to clients will remain unaffected, the scale of the cut—affecting over 12,000 employees—underscores the extent of transformation underway within India’s IT sector.
Sector-Wide Workforce Contraction
TCS is not alone in implementing workforce adjustments. Over the past six months, several leading IT firms have announced job cuts as part of broader cost-control and restructuring strategies. Below is a comparative snapshot:
| Company | Estimated Jobs Cut | Period | Primary Drivers |
|---|---|---|---|
| TCS | 12,200 | FY26 | Shift to AI, redundancy in mid-senior roles |
| Infosys | ~5,000 | Feb–June 2025 | Delay in client projects, cost efficiency |
| Wipro | ~4,000 | Jan–June 2025 | Restructuring and demand volatility |
| HCLTech | ~2,500 | Mar–June 2025 | Strategic realignment in key verticals |
| Tech Mahindra | ~3,000 | Apr–June 2025 | Transition toward margin-rich service lines |
Cumulatively, more than 26,000 jobs have been eliminated across the top five IT firms in India within the first half of 2025 alone. These figures reflect not merely cost-cutting exercises but a deeper shift in operational strategy.
Shifting Talent Strategy
The composition of the workforce itself is undergoing a transformation. Companies like TCS are focusing their hiring on early-career professionals and digitally skilled talent rather than mid- to senior-level generalists. At the same time, aggressive reskilling efforts are being deployed across internal teams, particularly in areas like AI engineering, cloud architecture, and cybersecurity.
The push for automation and AI-led services also means that fewer people are needed to manage traditional delivery tasks, a factor that is contributing to role consolidation and rationalization in large services organizations.
Macroeconomic Pressures Reinforce Industry Conservatism
Global inflation, cautious enterprise spending, and the lack of visibility into US trade policies are all exerting downward pressure on discretionary IT budgets. According to several analysts, even deals that are approved are being implemented in phased or delayed modes, which has led to underutilization of capacity among Indian IT vendors.
These conditions have forced IT majors to operate with tighter margins and scrutinize costs across the board. Job reductions, especially in middle and senior tiers, are seen as a way to preserve profitability while also preparing the organization for long-term structural shifts.
Conclusion
TCS’s announcement of 12,200 job cuts marks a significant inflection point for India’s IT sector. The workforce transformation, now visible across all major players, is being driven not just by cyclical demand slowdowns but by permanent changes in how IT services are delivered and consumed. As companies reorient toward AI, automation, and productized offerings, the structure of the workforce is being recalibrated accordingly.
The developments at TCS may set the tone for similar measures across the industry, as firms strive to remain lean, agile, and aligned with the technological and economic realities of the post-AI era.
