Information technology giant Tata Consultancy Services Ltd (TCS) shares slipped in trade on Monday, July 28, after Moneycontrol exclusively reported that the IT services firm will trim its workforce by two percent, impacting 12,000 jobs over FY2026.
TCS chief executive officer and managing director K Krithivasan, in an exclusive interview told Moneycontrol, “This is not because of AI giving some 20 percent 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,” he added.
At 9.18 a.m., shares of TCS were quoting Rs 3,088.9, lower by 1.5 percent on the NSE.
The job cuts will impact middle and senior level employees the most apart from some of the entry level associates who have been on the bench for a long time.
However, brokerages were not a fan of the move. International brokerage Jefferies noted that the plan to trim the workforce might lead to near-term execution slippages and higher long-term attrition. Going ahead, cost optimisation and AI-led productivity will drive most deal wins, and firms that are unable to gain market-share will have to resort to layoffs.
During this turbulent period for the domestic IT services sector, Jefferies prefers Infosys and HCLTech in the large-cap space, while Coforge and Mphasis are its picks in the mid-cap IT segment.
Global broking house Citi Research maintained its 'sell' call, with a target price of Rs 3,135 on TCS shares following the update. The brokerage noted that TCS' earnings for the quarter ended June indicate sluggishness in its core markets, and its margin and cash flow trends need to be monitored.
Also Read | Had to take 'difficult call' to build stronger TCS, says CEO K Krithivasan after cutting 12,000 jobs
TCS will be providing notice period pay and an added severance package to impacted employees, it will also look to extend insurance benefits and offer outplacement opportunities.
The layoffs won’t be geography or domain specific and will be concluded over the next three quarters of FY26. This comes a few weeks after the IT services behemoth updated its HR policy by mandating employees to have 225 days of billability in a year and limiting bench time to up to 35 days.
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