TCS, the country's largest IT company, has announced plans to lay off 2% of its global workforce in the upcoming fiscal year 2025-26. This puts approximately 12,261 jobs at risk. Notably, this layoff is expected to affect employees at the middle and senior levels. The news has also led to a sharp decline in the company's shares.
Stock Market Decline, Stir in the IT Sector
TCS shares saw a decline as soon as the stock market opened on Monday. The company's share price fell to ₹3,081.20 on the BSE, reflecting a decrease of approximately 1.7%. The Nifty IT index also fell by 1.6%, affecting other companies such as Infosys and Wipro.
TCS shares were among the weakest performers in the Nifty IT index in early trading. As of 9:40 AM, the company's share was trading at ₹3,095.25.
Why is TCS Undertaking Such a Large Layoff?
The company has announced plans to eliminate 12,261 positions. This layoff will affect employees in middle and senior management. According to the company, this step is being taken not due to "lack of work," but due to skill mismatches and the inability to properly deploy employees.
TCS CEO K. Krithivasan said in a conversation with Moneycontrol, “We will continue to hire and train new talent. This decision is related to the practicality of deployment and is part of the company's strategy to prepare for the future.”
Company Preparing for AI and New Technologies
TCS's focus is now on Artificial Intelligence (AI), automation, and business expansion. The company wants its team to be prepared for future needs. This is why teams with outdated skill sets are being laid off, and employees proficient in new technologies are being promoted.
Major Change in Bench Policy
TCS has recently changed its bench policy. Now, all employees must complete at least 225 billable days in a year. The bench (time without a project) limit has also been reduced to 35 days. This rule applies to employees who are not working on a project and are increasing the company's costs.
Attrition Rate and HR Concerns
The company's attrition rate, i.e., the rate at which employees are leaving, has increased to 13.8% by June 2025, up from 13.3% in the previous quarter. TCS's CFO described this as a matter of concern and said that the company is now working on a strategy to retain top talent.
First Quarter Results: Profit Increased but Revenue Fell
In the first quarter of FY26, TCS's net profit was ₹12,760 crore, an increase of 4.38% compared to the previous quarter. However, the company's total revenue decreased by 1.6% to ₹63,437 crore. This clearly shows that there has been a profit, but the pace of growth has slowed down.
Shareholders Also Suffer: Major Decline in Returns
The performance of TCS shares has been disappointing for investors in the last few months:
- In the last 1 month: Approximately 10% decline
- In 6 months: More than 23% decline
- In 1 year: Approximately 30% loss
- In the last 5 years: Only 33% return, which is significantly lower than the market average
What to Consider this Layoff as a Sign Of?
This TCS layoff is not just an internal decision of one company, but rather points to a larger industry trend. As technology changes, companies need skilled talent, and new roles are being created in place of old positions. This is affecting not only employees, but also the entire IT sector and market investors.
