TCS Set to Lay Off 12,000 Employees — But AI Isn’t to Blame, Says CEO

Tata Consultancy Services (TCS) is preparing to lay off around 12,000 employees globally, accounting for about 2% of its total workforce. This is expected to be the company’s largest layoff in its history. Initial speculation linked the move to the growing use of artificial intelligence (AI), but TCS has now clarified that AI is not the reason for this decision.

In a recent interview with Moneycontrol, TCS CEO K. Krithivasan addressed these concerns directly. He dismissed the claims that AI is displacing employees, stating that the layoffs are unrelated to AI adoption.

Why the Layoffs Are Happening

Krithivasan explained that the decision is due to a misalignment between employee skillsets and job requirements. “It’s not about AI improving productivity by 20% that triggered this move,” he said. “Some employees were hired into roles that don’t match their skill sets, and given the current business structure, it’s not possible to reassign them to different departments.”

The layoffs will be phased over the financial year 2026 and will affect both senior and junior-level employees, particularly those not currently assigned to active projects — often referred to within TCS as being on “bench time.”

AI Training Doesn’t Guarantee Retention

TCS has made significant investments in AI, having already trained 550,000 employees in basic AI skills and over 100,000 in advanced AI capabilities. However, Krithivasan emphasized that training alone doesn’t guarantee job retention. He noted that senior employees, in particular, may struggle to adapt to rapidly evolving technology-driven roles.

A Shift in Work Culture and Structure

TCS is undergoing a major shift in its operating model, moving away from traditional processes towards a product-focused approach. This transition reduces the need for roles like project and program managers. “Previously, we had multiple departments with individual leads. That structure is now changing,” Krithivasan explained.

A Difficult but Necessary Decision

According to the CEO, the decision was difficult but essential for the company’s long-term strategy. TCS aims to handle the layoffs responsibly, offering severance packages, health insurance for a limited period, mental health counseling, and outplacement support to affected employees.

While the company is letting go of 12,000 workers, it also remains open to hiring highly skilled and capable talent. “This is not a question of demand,” Krithivasan said. “We’re preparing ourselves thoroughly for the future.”