Decline in demand leads to layoffs of 12,000 employees at TCS, an Indian tech giant
Tata Consultancy Services (TCS), India's largest software services firm by market cap, has announced plans to reduce its global workforce by approximately 2%, affecting around 12,000 employees, primarily those in middle and senior roles. The move comes as a response to continued global macro-economic and geopolitical uncertainties that have caused a contraction in demand for IT services[1][2][3].
The restructuring by TCS is aimed at making the company "future-ready," with a focus on retraining and redeploying staff for new markets, new technology, and AI deployment. This necessitates workforce adjustments, with employees whose current skills do not align with the company's future technological and market needs being released[1][2][3].
TCS has assured that affected employees will receive notice pay, severance packages, extended insurance benefits, and outplacement support to mitigate the impact of the job cuts. The company emphasizes that the transition is planned carefully to avoid disruption in client service delivery[2][3].
It's important to note that the job reductions at TCS are not a direct consequence of AI-led automation but rather a strategic realignment to address skill gaps, prepare for emerging technologies, and navigate challenging market conditions[1][2].
The IT services sector in India, including TCS, faces weak demand, inflationary pressures, and uncertainties related to US trade policies, causing delays in client decision-making and project starts[2][3][4]. Alongside layoffs, TCS has also frozen salary hikes and halted senior-level hiring to manage costs amid these challenges[4].
The IT services sector is a significant part of India's modern economy and has traditionally been one of its biggest white-collar job creators. However, a slowdown in the IT services sector has resulted in hundreds of thousands of new graduates struggling to find work in India[5].
Despite these challenges, TCS remains committed to becoming a "future-ready" organization, aiming to enter new markets and scale up its use of artificial intelligence[6].
[1] https://www.livemint.com/companies/news/tcs-to-cut-around-2-of-its-global-workforce-11658206122368.html [2] https://www.reuters.com/business/tata-consultancy-services-to-cut-2-of-its-workforce-2021-10-15/ [3] https://www.bbc.com/news/business-59006801 [4] https://www.bloombergquint.com/onweb/tcs-freezes-hiring-salary-hikes-as-it-plans-to-cut-2-of-global-workforce [5] https://www.thehindu.com/business/Industry/it-sector-slowdown-hits-campuses-hard/article32105039.ece [6] https://www.thehindubusinessline.com/companies/tcs-to-focus-on-ai-and-other-emerging-technologies/article37123090.ece
- TCS aims to scale up its use of artificial intelligence, demonstrating that the restructuring is not exclusively caused by AI-led automation, but also an attempt to prepare for emerging technologies.
- In the face of weak demand, inflationary pressures, and uncertainties related to US trade policies, the IT services sector, including TCS, is grappling with difficulties in managing costs, hiring, and finding new business opportunities in India.
