India’s Largest IT Company Admits Its Workers Can’t Keep Up: Why TCS’s 20,000 Layoffs Signal the End of Traditional Outsourcing

Toppe Consulting – Your Source for Digital News & Trends in the Legal Industry

When Tata Consultancy Services announced plans to eliminate 12,260 positions citing “skill mismatch,” few anticipated the actual scale of workforce reduction that followed. By the close of Q2 FY26, TCS’s headcount had plummeted by 19,755 employees—from 613,069 to 593,314—marking the steepest decline in the company’s history and triggering accusations that India’s largest software company is obscuring the true magnitude of its workforce transformation.

The rationale TCS offers is more damning than a simple business downturn might be. “This is not because of AI giving some 20% productivity gains,” CEO K. Krithivasan clarified, distinguishing these layoffs from direct automation replacement. Instead, the cuts address what he describes as “deployment feasibility” issues where existing employees lack skills that clients now demand. Workers who devoted 20-25 years developing expertise in traditional IT services—programming in established languages, managing databases, providing technical support—find these capabilities insufficient as clients pursue AI-integrated solutions.

According to Business Standard’s analysis of TCS’s quarterly results, Chief HR Officer Sudeep Kunnumul confirmed that TCS released “1 per cent of the workforce, mostly mid and senior level, due to skills mismatch, providing them with benefits, counselling and transition support.” The company aims to remain a net job creator despite these reductions, but the gap between official layoff numbers and actual headcount decline has drawn scrutiny.

The Nascent Information Technology Employees Senate (NITES) has been particularly vocal about discrepancies. “This is not a minor difference. Nearly 8,000 employees more than what TCS admitted have disappeared from the rolls,” stated NITES President Harpreet Singh Saluja, claiming the difference between stated layoffs and actual reduction suggests deliberate underreporting.

What makes TCS’s situation particularly significant is the company’s financial health. As Medianama’s comprehensive analysis details, TCS reported over 6 percent revenue growth and the industry’s highest operating profit margin of 24.3 percent. The company simultaneously approved a 20 percent dividend increase for shareholders while eliminating mid-career professionals.

Understanding Why American Corporations Are Cutting IT Outsourcing Contracts as AI Replaces Offshore Labor provides essential context for how client-side transformations drive TCS’s workforce crisis.

The broader TWITCH companies (TCS, Wipro, Infosys, Tech Mahindra, Cognizant, HCLTech) are all navigating similar transitions. Each firm attributes recent deal wins to AI deployment rather than human labor provision. The collective message: success increasingly comes through technology platforms rather than scaling human workforces—a fundamental inversion of the business model that built India’s technology reputation.

Examining The Hidden Reskilling Crisis: Why India’s IT Giants Can’t Train Workers Fast Enough for AI Roles reveals why retraining programs haven’t prevented workforce displacement despite stated corporate commitments to employee development.

Toppe Consulting: Your Partner in Strategic Digital Transformation

At Toppe Consulting, we help businesses navigate technological disruption with strategic marketing solutions that deliver measurable results.

Our Services Include:

• Website Development – Professional digital presence that establishes credibility
• Contact Us – Discuss your strategic marketing needs

Ready to Strengthen Your Digital Presence? Contact Toppe Consulting to discuss how strategic digital marketing can support your organization’s objectives.

About the Author

Jim Toppe is the founder of Toppe Consulting, a digital marketing agency specializing in law firms. He holds a Master of Science in Management from Clemson University and teaches Business Law and Marketing at Greenville Technical College. Jim also serves as publisher and editor for South Carolina Manufacturing, a digital magazine. His unique background combines legal knowledge with digital marketing expertise to help attorneys grow their practices through compliant, results-driven strategies.

Works Cited

Das, Avik. “TCS headcount drops to less than 600k due to restructuring and layoffs.” Business Standard, 9 Oct. 2025, www.business-standard.com/industry/news/tcs-headcount-falls-below-600000-after-layoffs-in-july-2025-125100901286_1.html. Accessed 14 Nov. 2025.

“TCS Layoffs Mark Shift in India’s AI-Driven IT Sector.” Medianama, 7 Aug. 2025, www.medianama.com/2025/08/223-tcs-india-it-sector-layoffs-2025-impact-on-it-jobs/. Accessed 14 Nov. 2025.

Related Articles

• Why American Corporations Are Cutting IT Outsourcing Contracts as AI Replaces Offshore Labor
• The Hidden Reskilling Crisis: Why India’s IT Giants Can’t Train Workers Fast Enough for AI Roles