India’s IT giant Tata Consultancy Services (TCS) announced on Sunday it will reduce its workforce by 2% in FY2026, eliminating approximately 12,200 positions—primarily in middle and senior management—as it accelerates automation and AI adoption amid sluggish global demand. The Mumbai-based company, which employs over 613,000 people, emphasized the restructuring would not disrupt client services, signaling a strategic shift toward efficiency in the $283 billion Indian IT sector.
The move reflects broader industry pressures as clients defer non-essential tech spending due to economic uncertainty, inflation, and volatile U.S. trade policies. TCS CEO K Krithivasan recently noted delays in project approvals, while analysts warn of shrinking margins as firms face demands for 20-30% cost cuts. “AI is dismantling the people-heavy services model,” said HFS Research CEO Phil Fersht, noting TCS’s rare layoffs underscore the sector’s scramble to rebalance workforces.
TCS’s decision marks a departure from its reputation as a stable employer, highlighting the disruptive impact of generative AI on traditional IT service models. The cuts follow similar workforce optimizations by rivals like Infosys and Wipro, though TCS had previously avoided large-scale layoffs through natural attrition.
With global IT spending growth projected to slow to 4% in 2026 (Gartner), Indian firms face a pivotal transition. While TCS invests in AI training for 350,000 employees, analysts caution that job losses may extend beyond management tiers as automation penetrates coding and maintenance roles. The restructuring signals a new era for India’s tech sector—one where efficiency gains could come at the cost of its historic employment buffer.