The buzz surrounding Tata Consultancy Services’ (TCS) announcement to lay off 2% of its global workforce continues to stir concern across the IT industry. Adding to the anxiety, the Indian IT giant has now implemented a hiring freeze and paused annual salary increments for employees worldwide.
These decisions come at a time when the sector is grappling with subdued demand and a growing emphasis on artificial intelligence (AI). According to an Economic Times report, several employees on the bench—particularly in locations such as Pune, Chennai, Kolkata, and Hyderabad—are being phased out. This follows TCS’s internal policy requiring benched employees to secure new project placements within 35 days or face exit.
While TCS maintains that the restructuring is aimed at streamlining operations and enhancing agility in line with technological advancements, the move has sparked backlash from employee unions. The Forum for IT Employees (FITE) has termed the decision “unfair and unlawful,” arguing that TCS is prioritizing profits despite not facing any financial distress.
The company has confirmed that it is ramping up investments in AI and emerging technologies. As part of this transition, several reskilling and redeployment programs have been launched. However, employees who cannot be successfully redeployed will be let go—potentially affecting around 12,000 workers. TCS has assured that those impacted will receive all benefits as per company policy, along with appropriate support.
Despite these assurances, unions have urged affected employees not to resign under pressure, and called for a rollback of the decision. The Ministry of Electronics and Information Technology (MeitY) is reportedly looking into the matter and seeking clarity on the rationale behind the layoffs.
With job cuts, hiring pauses, and wage stagnation occurring simultaneously, industry observers say these developments reflect a major inflection point for the Indian IT services sector, driven largely by automation, evolving client needs, and the accelerating shift to AI-powered models.
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