India’s largest IT services firm, Tata Consultancy Services (TCS), is set to reduce its global workforce by approximately 2%—translating to over 12,000 employees—during fiscal year 2026. The decision is part of a broader strategy aimed at aligning the company with evolving technological demands and ensuring it remains agile in an era of rapid transformation, particularly with the growth of AI and changing operating models.
The layoffs, affecting employees across different geographies and roles, will be implemented gradually from April 2025 through March 2026. TCS CEO K. Krithivasan emphasized that this is one of the most difficult decisions he has had to make but described it as essential for long-term competitiveness.
“The nature of work is evolving fast. While we’ve invested significantly in upskilling and redeployment efforts, there remain roles where transition has been less effective. This adjustment, focused primarily at middle and senior levels, is necessary to prepare TCS for what lies ahead,” said Krithivasan in a statement.
Not a Cost-Cutting Move
Krithivasan clarified that the restructuring is not a reaction to financial pressure or AI replacing jobs, but rather a proactive measure to realign the company’s skill base with future needs. He underscored that demand for next-generation capabilities is growing, and TCS must evolve accordingly.
New Bench and Billability Policy
The headcount reduction follows recent changes to the company’s bench policy, which now requires employees to maintain a minimum of 225 billable days per year. Those unable to secure a project within 35 days risk disciplinary action, including termination.
These new rules, introduced by the company’s Resource Management Group in June 2025, place more accountability on employees to seek deployment opportunities. The objective, according to TCS, is not to drive efficiency metrics but to promote consistent engagement across projects.
However, internal feedback suggests the transition is being felt acutely. Some employees who have been benched for over two months reported being asked to resign in exchange for severance pay. Those unwilling to comply reportedly face immediate termination without severance.
Wider Industry Implications
As one of the largest private sector employers in India, TCS’s move may prompt similar actions from peer companies facing the same pressures—especially as AI continues to reshape client expectations around project timelines and workforce utilization.
Industry observers note that skills like manual testing and legacy support are becoming less relevant, particularly as clients demand leaner, AI-enabled delivery models. According to data from UnearthInsight, average bench times across Indian IT firms have already declined over the past 18 months—from 45-60 days in previous years to around 35-45 days currently. This trend is expected to continue into FY26.
Additionally, delays in client decision-making during Q1 FY26 contributed to the company’s re-evaluation of staffing strategies. TCS executives believe that many of these delays will resolve in the coming quarters, leading to stabilized demand.
Support for Affected Employees
TCS has committed to making the transition as smooth as possible for those affected. In addition to notice period compensation, the company is also providing severance packages, continued insurance benefits, and outplacement support to help individuals find new roles.
Looking Ahead
While the restructuring signals a tough chapter for TCS employees, it also represents a critical pivot for the company as it invests in future-ready skills and digital capabilities. The move underlines how India’s IT giants are adapting to a market where efficiency, adaptability, and advanced technological fluency are paramount.
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