MC Interview: Had to take 'difficult call' to build stronger TCS, says CEO K Krithivasan after cutting 12,000 jobs

Edited excerpts:

What's happening at TCS? We have been hearing from sources that there are layoffs planned that could impact thousands of employees? 

We have been calling out that with a lot of these new technologies coming in -- particularly AI -- and along with it this time, the operating models are changing. Clients are moving more towards product-aligned model and more agility coming in.

The ways we are working is changing, and operating model is changing. This also means that, as an organization, we have to be futuristic, we have to be agile, we have to be future ready. We have to have the right skillsets to work in the future.

So we have been investing on big plans, we have been investing in new markets. For our clients, we have been deploying AI-scale deep learning partnerships.

At the same time, we have also been evaluating what are the skills that we will be requiring, capabilities that we will be requiring going forward. Based on that evaluation, we have invested a lot in our associate training programs and what is the best learning platform available, how do you provide them career goals, if a career role change is required, deployment change is required, and also providing them with the right leadership training.

And we have re-deployed them also into new markets. But with all that, you would always find a small set of associates where the re-deployment has not been effective or it's not being feasible.

So, in this context, while we have to take a difficult decision, that’s a small percentage. We may have to release them from the organization.

We expect it will be about 2% of the global workforce, mostly in the middle and senior levels. We may have to let them go because most importantly, the effectiveness of deployment or feasibility of deployment is not possible. This is definitely not an easy time for us, not an easy time for the associates, because we have not done this before. It's a difficult call we have to take. We have been doing this with a lot of compassion and empathy with proper benefits, counselling, outreach and support.

But at the end of it, we believe that we will build a stronger future for TCS, for our associates, clients, and also to help them be in future ready and able to respond to the needs of the market, needs of the environment they are operating in.

So, 2% would translate to roughly 10,000 employees getting laid off?

We are roughly about 600,000 employees. So, it will be 10,000 - 12,000 employees getting impacted.

Significant part of this will be in the middle and the senior levels. At the bottom of the pyramid, if somebody has been on the bench for a long period of time, they probably will be impacted. But, it's primarily in the middle and senior level.

Is this also because you don’t need too many titles and roles like program manager, project manager anymore?

When we did programs in the old waterfall method, we had multiple leadership teams driving it. But as we move towards more product-aligned model where are more agile, where clients also work along with us -- clients bring in their leadership team, the pure non-technical managerial talent is required. The number in which we require them also increases. So, that's what I said, we try as much as possible, we retrain all of them into technical capabilities, techno-functional.

Some of them are very good in domain. With all that, then if it's not becoming feasible to re-require some of them, then we have to take precautions.

Will you do this in this over the next three quarters?

We intend to do it over this year, in FY26.

This will obviously create anxiety for employees. Have you already identified them? Have you prepared them? What kind of severance will they be getting?

It's a process through which we identify the people. It will be coming through the year. We won’t do it in a hurry. We will be first talking to the people that could be impacted. We will provide them an opportunity.

When we are not able to provide the opportunity, then we need to do the step we need. And, that is, we will do whatever is the benefit that we have to provide. We will provide appropriate benefit.

The HR has a good policy on how we will do it. They will follow the policy. We will provide the benefits like extending their insurance cover where we can. We are looking outplacement service where we are employing the agencies on outplacement.

We'll also provide them support on outplacement and any counselling required. We'll take care of it. We will do it in a very, very compassionate way.

Do you see scope for some of these redeployments to happen within Tata Group companies?

We'll definitely reach out to them and see whether there is an opportunity for some of them to get into these organizations. But, they will take the decision based on their needs.

Is this like the first big impact of AI we are seeing in an Indian tech company?

No, this is not because of AI giving some 20% productivity gains. We are not doing that. This is driven by where there is a skill mismatch, or, where we think that we have not been able to deploy someone.

It is not because that we need less people. We will continue to look for high (quality) talent, acquiring talent, training talent. That continues to happen.

This is more about where there is a feasibility of deployment.

Any specific geographies that you have identified where we'll probably see more of this happening?

It is not geography specific. It is on a global workforce, we will do it. We will not do geography-wise either in India or globally. We will not be doing it for any particular industry domain. It is essentially skill and capability based. Where we find that either the, wherever the feasibility of deploying them is not there, we will take this route.

Are the employees going to get three-months worth of severance pay?

See, first of all, normally people get their notice period pay. And then we are working out a severance package which would be on top of the notice period. So, they will be entitled.

Are employees already trained by TCS in AI skills also likely to get impacted?

We trained a lot of people. We have trained about 550,000 people at the initial skills, 100,000 at the advanced skills. Essentially, after training whether we have the deployment feasibility issue. So, some of them could be trained, but maybe we are not able to train beyond level 1 and level 2 skills, because when the person is at a very senior person they may not be able to use the entry level skills.

This is more based on skill capability or ability to deploy them.

Has the tolerance to extend bench time come down for all companies because of the nature of projects? Are project sizes and durations shrinking?

There is nothing like that to say. Where we find the feasibility to redeployment is not there, as we find some cases based on the skills and based on what we need -- in such cases, we are taking this action.

Is this a function of the overall demand environment? And is this one of the toughest decisions that you have had to take since you took charge of CEO?

This is definitely one of the tough decisions for me to take because for anyone and for me particularly, it is a very tough decision. This is not a question of demand. We have been talking about TCVs and we have been having demand.

It is not a question of demand. It is a question of we being future ready. We have to make decisions.

Have you already calculated what impact this might have on margins?

While we do this, this is not driven by margins. But once it is visible, I am sure Samir (CFO Samir Seksaria) will call it out at the appropriate time, what will be the impact or what is the charge we are taking. The motivation is not margins, so we have not gone over this.