TCS Layoffs 2025-2026: AI Transformation and Skill Mismatch Explained
Published By
Akshay
Approved By
Chirag AroraPublished On
11th Nov, 2025Updated On
11th Nov, 2025Min Reading
5 Tech Research Today
According to the research team of ClipsTrust, Tata Consultancy Services (TCS), India’s largest IT services company, undertook a historic workforce restructuring in 2025 by laying off approximately 12,000 employees, accounting for about 2% of its global workforce. This significant downsizing mainly affected mid- and senior-level professionals and stemmed from a strategic initiative to transform into a more agile, future-ready organization aligned with emerging technology trends, including artificial intelligence (AI).
The layoffs were not purely due to AI-driven productivity gains, as clarified by TCS CEO K. Krithivasan. Instead, they primarily resulted from skill mismatches and challenges in redeploying employees, especially those experienced in legacy project delivery models like the traditional “waterfall” approach. Despite extensive reskilling efforts—training over 550,000 employees in basic AI skills and around 100,000 in advanced AI—many have struggled to transition to new, tech-centric roles. The company is shifting toward a product-focused, agile delivery model requiring fewer conventional project managers and more specialized expertise.
This workforce realignment reflects broader transformations sweeping India’s IT sector amid global economic uncertainties and rapid AI adoption. The restructuring serves as a wake-up call for IT professionals to upskill in AI and related digital technologies to maintain relevance and competitiveness. TCS has committed to supporting those impacted with severance packages, extended insurance benefits, mental health counseling, and outplacement services while continuing to recruit and train new talent aligned with future requirements.
Industry experts echo the sentiment that AI adoption is reshaping job roles but underline that adaptability, continuous learning, and skill enhancement remain critical for career longevity. They advise IT professionals to proactively integrate AI skills and technologies into their expertise to thrive in the evolving digital ecosystem.
Skill Mismatch: Legacy skillsets and difficulty adapting to modern agile and AI-driven models.
Operating Model Shift: Moving from waterfall to product-centric approach reduced need for traditional roles.
Technological Transformation: Focus on AI, automation, and next-gen digital services reshapes workforce needs.
Reskilling Initiatives: Large-scale AI training underway, but not all employees could be successfully redeployed.
Aspect | Benefits | Challenges |
Future-readiness | Aligns company with AI and modern tech trends | Short-term job losses cause insecurity |
Increased agility | More flexible, product-focused operations | Requires extensive retraining and mindset shifts |
Cost Optimization | Reduces overhead by removing redundant roles | Impact on employee morale and public perception |
Skill Upgradation Focus | Forced reskilling and growth opportunities | Not all employees can transition effectively |
TCS and other industry players offer multiple reskilling programs ranging from basic to advanced AI certifications. Some key points include:
Basic AI Training: Free internal courses for large employee groups (~550,000 trained).
Advanced AI Skills: Specialized certifications and paid courses for focused job roles (~100,000 trained).
External Certification Programs: Offered by institutes like NASSCOM, Coursera, and Udacity in partnership with IT companies.
Corporate Learning Plans: Subscriptions and partnerships used for continuous professional development.
Role Type | Traditional Model | AI-aligned Model |
Project Managers | Waterfall, multi-layered leadership | Agile, product owner roles |
Developers | Focus on manual coding/testing | AI-assisted automation, advanced coding |
Support Staff | Manual customer service | AI-chatbots with human oversight |
Analysts | Standard reporting | Data science, AI model interpretation |
Mid-Level Manager Transition
Problem: Struggled to shift from waterfall projects to agile frameworks.
Solution: Undertook formal agile and AI training.
Outcome: Successfully transitioned as product manager, retained role.
Senior Developer Upskilling
Problem: Legacy coding skills insufficient for AI tools integration.
Solution: Enrolled in advanced AI certification programs.
Outcome: Moved to AI software development team.
Junior Analyst Redeployment
Problem: Low bench time and skill mismatch risk.
Solution: Cross-trained in data analytics and AI tool usage.
Outcome: Redeployed to emerging digital services projects.
Employee Sentiment Survey: Mixed responses; relief among reskilled, anxiety among those laid off.
Industry Expert Opinion: Points to structural evolution in IT workforce catalyzed by AI and agile.
General Public View: Concern over job security but optimism for tech-driven sector growth.
“This is not about AI cutting jobs but about preparing for the future. Skills must evolve.” – K. Krithivasan, TCS CEO
“Adaptability is the key to surviving the AI revolution in IT.” – Industry Analyst
“Reskilling is no longer optional but mandatory in the digital age.” – ClipsTrust Research Team
Emphasize continuous skill development focused on AI and digital proficiency.
Manage career expectations and be proactive in reskilling early.
Employers should provide transparent communication and robust support systems.
Leverage online and internal training platforms for agility.
Issue | Proposed Fix |
Resistance to Reskilling | Organizational support and incentives |
Skill Gaps Post-Layoff | Accessible, affordable training options |
Job Role Ambiguity | Clear career pathways and counseling |
Mental Health Concerns | Counseling and flexible transition aid |
Regularly update digital skills portfolio incorporating AI tools.
Seek mentor guidance and peer learning opportunities.
Network within new agile and AI-focused teams.
Monitor emerging tech trends and adapt swiftly.
Understanding the real impact of AI on large employers like TCS informs professionals about market realities and prepares them for proactive career navigation. This knowledge empowers readers to avoid complacency, embrace continuous learning, and leverage AI advancements for career growth.
Q1: Are all TCS layoffs due to AI?
No, the primary cause is skill mismatch and operating model shifts, although AI is a key element in business transformation.
Q2: How can affected employees recover?
Through upskilling in AI and agile methods, using company-offered training or external certifications.
Q3: Does TCS plan to hire again?
Yes, TCS continues to recruit talent aligned with future technology demands.
Q4: What support does TCS provide?
Severance, extended insurance, mental health support, and outplacement services.
Q5: Is AI a threat or opportunity for IT workers?
Both; it challenges existing roles but offers pathways for new skills and growth.
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