TCS prepares job cuts as sector watches rise of AI

Hindustan Times

6 days ago

Tata Consultancy Services (TCS) will lay off approximately 12,000 employees this fiscal year, as India's biggest private employer adjusts to slowing growth and rising artificial intelligence (AI). This would imply that TCS, which ended the June quarter with 613,069 employees, will let go of 12,200 employees. (Bloomberg)
The company attributed the decision, which will primarily impact senior and middle-level employees, partly to AI.
'TCS is on a journey to become a future-ready organization,' a company statement said on Sunday. 'This includes strategic initiatives on multiple fronts including investing in new-tech areas, entering new markets, deploying AI at scale for our clients and ourselves, deepening our partnerships, creating next-gen infrastructure and realigning our workforce model.'
'As part of this journey, we will also be releasing associates from the organization whose deployment may not be feasible. This will impact about 2% of our global workforce, primarily in the middle and the senior grades, over the course of the year,' TCS said.
This would imply that TCS, which ended the June quarter with 613,069 employees, will let go of 12,200 employees. Mint has learnt that TCS has already asked 100 employees in Bengaluru to go over the last fortnight.
Also Read | Artificial intelligence behind 12,000 TCS job cuts? CEO K Krithivasan breaks silence
The TCS job cuts come 30 months after the debut of ChatGPT cast a shadow over the business model of India's IT giants employing armies of coders. Just two weeks ago, India's third-largest IT services firm HCL Technologies Ltd mentioned potential layoffs as automation replaces work done by graduates.
'The impact of AI is eating into the people-heavy services model and forcing the large service providers such as TCS to rebalance their workforces to maintain their profit margins and stay price competitive in a cut-throat market where clients are demanding 20-30% price reductions on deals,' said Phil Fersht, chief executive of HFS Research.
'This trend will last for about a year as the leading providers focus on training junior talent to work with AI solutions, and are forced to move on people who will struggle to align with the new AI model we call services-as-software,' said Fersht.
Meanwhile, fourth-largest Wipro Ltd is planning English competency tests for senior executives. Those faring poorly in the first-of-its-kind exercise may be put on performance improvement plans, according to three executives privy to the development, stoking fears of potential layoffs.
'Please note that it is mandatory to take the communication assessment and clear it,' read an internal email shared with Wipro employees on 19 July and accessed by Mint. 'Not taking the assessment will invite disciplinary action. Not clearing it in one attempt will result in a Performance Improvement Plan (PIP),' read Wipro's email. A PIP is often seen as a prelude to termination.
Queries emailed to Wipro went unanswered.
At HCL Tech, it is graduates who are in the crosshairs.
'Of course, we have had a good amount of people released due to the productivity improvements. Now, not all of them are readily redeployable, because the requirements for some of the entry-level or lower-end skills are being addressed through automation and other elements,' CEO C. Vijayakumar said on 14 July. 'The training and the redeployment time is longer. Some of them will be redeployed, but for others, it may not be possible. So, some amount of change in the industry is also kind of causing this,' said Vijayakumar. An email sent o HCL seeking comment went unanswered.