Tech giant TCS plans to dismiss 12,000 workers due to AI-related job uncertainties
Global investment banking firm Jeffries has commented on the challenges faced by India's IT sector, with one of the most notable developments being TCS's decision to lay off around 12,000 employees[1]. The layoffs, which began in the first half of July 2023, are primarily due to skill mismatches and the need for workforce realignment in response to AI deployment and technology investments[2].
The layoffs predominantly affect middle and senior management levels, and TCS views this move as a necessary adjustment rather than just cost-cutting[3]. According to industry experts, 400,000 to 500,000 IT professionals could face layoffs over the next 2-3 years due to skill mismatches, particularly those with 4-12 years of experience[3].
AI is increasingly automating tasks previously done by humans, such as coding, testing, and customer support. This automation leads to reduced need for traditional roles and requires a reshaped workforce with new skill sets[3]. TCS is focusing on becoming a "future-ready organisation" amid economic uncertainties and AI-driven disruptions in business demands[1][2].
In addition to skill mismatches, broader economic uncertainties also influence the workforce size reduction. Corporate IT spending becomes cautious, and client decision-making slows down, affecting revenue growth and hiring pace within the industry[1][2][5].
TCS is providing impacted employees with severance benefits, career transition assistance, and other support measures[2]. Meanwhile, junior and mid-level staff not affected by layoffs have received salary hikes, showing a focus on retaining and rewarding evolving skill sets in the organization[5].
Reskilling and redeployment initiatives are underway within TCS as part of this strategy. Business heads of TCS have been asked to submit a list of employees who may be considered for layoffs[4]. A third of the employees to be laid off in the coming months are from the benched section[4].
The IT sector's growth is affected by tariffs chiefly targeting physical goods, with U.S-based demand for IT services having been impacted by President Donald Trump's tariffs[6]. Analysts suggest that companies are pausing on discretionary IT spending due to tariff uncertainties and global sourcing strategy reconsideration[6].
The announcement by TCS reflects the broader growth challenges being faced by India's IT sector. The sector needs a million AI professionals by 2026, but only 20% of its IT professionals are AI-skilled[7]. Rishi Shah, economist with Grant Thornton Bharat, believes that AI is forcing businesses to reassess their workforce structure[7].
It's important to note that the Equal Employment Opportunity Commission (EEOC) is currently probing TCS for discrimination allegations[8]. Employees with work from office (WFO) index issues are among those being released[8].
Despite these challenges, tech companies are intensifying their upskilling efforts, but those without necessary skills are often asked to leave[9]. TCS's strategy for these layoffs is to become a "future-ready organization," focusing on technology investments, AI deployment, market expansion, and workforce realignment[1][2].
References:
- TCS to lay off 12,000 employees amid AI-driven disruptions
- TCS lays off employees as part of strategy to become a future-ready organization
- Why TCS is laying off 12,000 employees
- Tata Consultancy Services to lay off 12,000 employees
- TCS gives salary hikes to employees not affected by layoffs
- Tariffs and IT spending: A delicate balance
- India needs a million AI professionals by 2026, but only 20% of its IT professionals are AI-skilled
- EEOC investigates TCS for discrimination allegations
- Upskilling efforts intensify as tech companies ask employees to adapt or leave
- The financial implications of TCS's decision to lay off 12,000 employees are significant, signifying a shift in the business sector as technology investments and AI deployment demand a reshaped workforce with new skill sets.
- In the realm of education and self-development, the IT sector's challenge to produce a million AI professionals by 2026 underscores the urgent need for continuous learning and upskilling to stay competitive in an AI-driven economy.
