TCS to Lay Off Over 12,000 Employees in 2026 as AI Reshapes IT Services
Tata Consultancy Services (TCS), India’s largest IT services firm, has announced a 2% workforce reduction for the 2026 financial year, resulting in the elimination of approximately 12,200 jobs. The decision primarily targets middle and senior management roles as the company realigns its operations to embrace artificial intelligence and meet the demands of a shifting global tech market.
AI Adoption Drives Job Cuts in India’s Largest IT Company
TCS currently employs over 613,000 professionals worldwide, making it one of the largest private-sector employers globally. However, the rapid integration of AI and automation is compelling the company to streamline operations and optimise workforce structure.
“This transition is being planned with due care to ensure there is no impact on service delivery to our clients,” TCS said in an official statement on Sunday.
Why Is TCS Cutting Jobs?
Several key factors are driving this workforce reduction:
- AI and automation adoption are reducing reliance on manual labour
- Delayed client decisions and project launches, according to CEO K Krithivasan
- Global economic uncertainty and reduced tech spending by clients
- Pressure to maintain profit margins in a competitive pricing environment
“AI is eating into the people-heavy services model,” said Phil Fersht, CEO of HFS Research. “Large service providers like TCS are being forced to rebalance their workforce as clients push for 20–30% price cuts.”
What It Means for India’s $283 Billion IT Sector
TCS’s decision is seen as a landmark moment for the Indian IT industry, long known for its job stability and high retention. The move underscores a broader trend where even legacy giants must adapt to automation and global headwinds.
India’s $283 billion IT services industry is facing:
- Budget freezes on non-essential IT services by global clients
- Ongoing inflationary pressures
- Uncertainty around U.S. trade and outsourcing policies
These combined forces are prompting workforce rationalisation, even among top-tier players.
TCS’s Strategic Focus Going Forward
Despite the job cuts, TCS remains committed to expanding into new markets and investing in AI, cloud, and digital transformation services. The workforce optimisation is aimed at:
- Improving efficiency through AI integration
- Reallocating talent to higher-growth, future-proof service lines
- Strengthening client competitiveness with agile and cost-effective delivery models
Industry Implications: Stability Gives Way to Scalability
TCS, known for its employee-friendly work culture, is now signalling that scalability and profitability will be critical in the age of AI. Industry experts predict that other major Indian IT companies may follow suit as automation accelerates across the sector.
“TCS’s move highlights a tectonic shift in how IT service providers must evolve to remain viable in today’s digital economy,” Fersht added.
