India’s Tech Giant TCS to Slash 12,200 Jobs by FY26: AI Shift and Market Pressures Drive Workforce Restructuring

• Why Is TCS Reducing Its Workforce Despite Recent Hiring?
• How AI Is Disrupting India’s “People-Centric” IT Model
• The Skill Gap Crisis: Cloud and Cybersecurity Shortages
• Government Backing vs. Market Realities
• Q&A: Decoding TCS’s Workforce Strategy

Tata Consultancy Services (TCS), India’s largest IT firm, announced plans to cut 12,200 jobs by fiscal year 2026, citing AI adoption, market volatility, and a widening skill gap. Despite hiring 6,071 employees in Q1 FY26, attrition rose to 13.8%, reflecting industry-wide challenges. CEO K. Krithivasan emphasized agility and future-readiness, while experts warn of margin pressures and talent shortages in cloud computing and cybersecurity. Here’s a DEEP dive into the forces reshaping India’s $245 billion IT sector.

Why Is TCS Reducing Its Workforce Despite Recent Hiring?

TCS added 5,090 employees on average in Q1 FY26, yet plans to trim 2% of its 613,069-strong workforce. The paradox stems from a strategic pivot:is replacing repetitive roles, while demand for niche skills (like AI governance and cloud architecture) outstrips supply. CEO Krithivasan noted, “We’re scaling AI deployment while reskilling associates—this isn’t about cuts but recalibration.” The attrition rate uptick to 13.8% signals workforce churn as employees chase higher-paying roles in startups or overseas.

How AI Is Disrupting India’s “People-Centric” IT Model

Phil Fersht of HFS Research observes that clients now demand, forcing firms like TCS to automate. Generative AI tools handle code reviews and customer service, reducing reliance on entry-level engineers. TCS has already deployed AI for 200+ use cases, from fraud detection to HR analytics. However, legacy contracts with fixed pricing limit immediate gains—hence the cautious layoff rollout to avoid service disruptions.

The Skill Gap Crisis: Cloud and Cybersecurity Shortages

India faces ain cloud professionals (only 1.5 million available vs. 3.9 million needed) and 700,000 unfilled cybersecurity roles. Outdated university curricula and insufficient hands-on training leave just 51% of graduates job-ready. TCS’s response? A $1.2 billion annual training budget and partnerships with Coursera. Yet, as Krithivasan admits, “Upskilling takes time—we’re bridging gaps through lateral hires, even at 30% higher recruitment costs.”

Government Backing vs. Market Realities

While India’s IT sector enjoysand STPI tax breaks, macroeconomic headwinds persist. The U.S. (60% of TCS revenue) has delayed project kickoffs due to inflation and trade policy uncertainty. Subcontracting and underutilization—common cost-saving tactics—now backfire, squeezing margins to 18–20%. “Clients want outcomes, not headcount,” says a BTCC analyst. “Firms must balance automation with niche talent retention.”

Q&A: Decoding TCS’s Workforce Strategy

How many jobs will TCS cut?

TCS plans to eliminate 12,200 roles (2% of its workforce) by FY26, primarily in legacy support functions.

What’s driving attrition in Indian IT?

Higher wages at startups, visa-free opportunities in Europe (e.g., Germany’s Chancenkarte), and dissatisfaction with variable pay cuts.

Will AI create new roles?

Yes—TCS projects a 15% rise in AI trainer and data ethicist roles by 2026, offsetting 40% of repetitive job losses.