Tech giant TCS mulling layoffs amidst industry-wide surge in AI adoption
In the rapidly evolving tech landscape, Tata Consultancy Services (TCS), HCL, and Wipro are making significant changes to their workforces. The planned layoffs at these companies are primarily driven by a combination of industry-wide demand slowdown, skill mismatches, and the adoption of automation and AI technologies leading to restructuring and cost optimization.
TCS, one of the largest IT services companies in India, is set to cut around 2% of its workforce, approximately 12,000 employees. While AI leads to productivity gains, TCS CEO K. Krithivasan clarified that layoffs are not mainly due to AI-driven productivity gains but because of skill mismatches and deployment challenges. TCS is also freezing salary hikes and senior-level hiring as part of this broader cost-control move.
HCL and Wipro are also adopting a cautious approach to hiring and selective role cuts despite revenue growth. This reflects a wider industry reset as these firms adopt automation and AI-driven productivity enhancements, leading to workforce recalibration. Companies are designing smaller, more efficient teams aligned with new technology needs.
Analysts note that consulting-focused companies like Wipro face additional challenges from reduced business activity and the need to develop new employee skills in AI and digital transformation, which contribute to layoffs and hiring slowdowns.
Despite these layoffs, top Indian IT companies, including TCS, Infosys, Wipro, and HCL, are reporting steady or growing revenues. However, the revenue per employee is increasing, indicating improved productivity through technologies like AI but resulting in fewer net additions or workforce reductions.
The impact of AI is causing a shift in the workforce composition of large service providers like TCS. The layoffs will primarily affect senior and middle-level employees. Phil Fersht, chief executive of HFS Research, has stated that the large service providers are being forced to rebalance their workforces to maintain profitability and competitiveness in the market.
India's IT services firms are facing challenges in maintaining profit margins and staying price competitive due to client demands for large price reductions. TCS has already asked 100 employees in Bengaluru to leave over the last fortnight. HCL Technologies Ltd has also mentioned potential layoffs as automation replaces work done by graduates.
TCS aims to become a future-ready organization by investing in new technologies, entering new markets, and deploying AI at scale. The company is looking to adapt to the changing landscape and ensure long-term success in the tech industry.
- TCS, in an effort to become future-ready, is investing in new technologies and entering new markets, with a focus on deploying AI at scale.
- The planned layoffs at TCS are primarily due to skill mismatches and deployment challenges, not AI-driven productivity gains.
- Despite steady or growing revenues, India's IT services firms like TCS, Infosys, Wipro, and HCL, are experiencing increased revenue per employee, indicating improved productivity through technologies like AI, resulting in fewer net additions or workforce reductions.
- As India's IT services firms, including TCS, face challenges in maintaining profit margins and staying price competitive, they are also facing a workforce shift due to the impact of AI, with senior and middle-level employees being affected primarily by the layoffs.
