What is TCS Workforce Restructuring

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What’s Happening?

TCS plans to reduce its global workforce by 2% in FY 2026, affecting approximately 12,000–12,200 employees, mostly in middle and senior management roles.

This restructuring is part of a broader push to become a “future‑ready organisation”, driven by evolving demand dynamics and technological shifts.

Why Is TCS Restructuring?

Skill‑Deployment Mismatch
According to TCS CEO K. Krithivasan, layoffs are being prompted by deployment feasibility issues, not direct AI substitution. Many trained employees remain underutilized.

Bench Policy Changes
A new policy limits non‑billable or “bench” time to 35 days per year, requiring a minimum of 225 billable days. Employees failing to meet this may face termination.

AI & Efficiency Pressures
While TCS downplays AI as the root cause, experts note that automation and digital tools are reshaping workforce needs and compressing profit margins. Other IT firms are following suit, signaling a sector-wide shift.

TCS Stock Price

How Is the Process Being Executed?

Phased Across FY 26 (April 2025–March 2026), affecting multiple geographies and business lines.

Support measures for affected employees include notice‑period pay, severance packages, extended insurance, counseling, and outplacement services.

TCS emphasizes the decision is being handled “in a compassionate way” .

Reactions & Industry Implications

Regulatory and Union Scrutiny
India’s IT Ministry is monitoring the process, while employee union NITES has called the cuts illegal and unethical, threatening protests and legal action .

Criticism Over Executive Pay
The layoffs sparked public debate, especially after reports that CEO K. Krithivasan earned ₹26.52 crore in FY 2025, prompting questions about fairness while thousands are losing jobs.

Analyst Warnings
Firms like Jefferies caution that repeated cost‑cutting measures could hurt morale, drive up attrition, and introduce execution risk.

Sector Trendsetter
As India’s largest IT company, TCS’s actions are seen as a bellwether. Other firms like Infosys, Wipro, Cognizant, and HCL Tech may follow in recalibrating workforce models.

Summary

Topic	Implications
Employees	Greater pressure on billability; increased volatility at senior levels.
Job Market	Rising demand for new skills like AI, cloud, digital transformation.
Clients	Potential short-term disruption; long-term gains in efficiency and innovation.
Industry	IT labor model is shifting from large pyramids to leaner, more agile structures.

Bottom Line

TCS’s workforce restructuring is a strategic realignment aimed at optimizing talent deployment amid changing industry demands. While competency gaps and shifting client requirements are at the heart of the decision, the move underscores broader tensions around job security, executive accountability, and the future of work in India’s IT sector.