AI anxiety or cost cuts? Tech layoffs continue to surge as TCS sheds 12,000 jobs

Artificial Intelligence

The tech industry is in the middle of a dramatic restructuring. In just the first half of 2025, over 94,000 tech workers globally have lost their jobs, with companies from Microsoft to Intel, Meta to Salesforce announcing major reductions. Analysts estimate that as many as 507 roles per day are being eliminated as companies recalibrate for an AI-first future, as per multiple reports.

One of the most visible narratives has centred on the idea that artificial intelligence is directly causing mass layoffs. While some executives — such as Amazon CEO Andy Jassy — have openly stated that AI-driven efficiencies will inevitably shrink corporate workforces over time, others haven't attributed the workforce trimming to artificiali intelligence. For example, CEOs at multiple firms argue that layoffs are rooted in reskilling needs, economic uncertainty, or the end of pandemic-era overhiring, rather than AI automation alone.

In India, Tata Consultancy Services (TCS) recently announced plans to cut 12,000 jobs, representing roughly 2% of its global headcount of 613,000 employees . While some reports tie this move to AI disruption and shrinking demand in traditional IT services, TCS CEO K. Krithivasan pushed back, stating that “AI giving some 20 percent productivity gains” is not the reason for the cuts. Instead, in an exclusive interview with Moneycontrol, he cited a skill mismatch and lack of deployment feasibility for certain roles, especially among mid and senior-level staff

TCS has undertaken massive upskilling efforts — training over half a million employees at basic and advanced levels in AI and emerging tech. Yet the company says not all employees could fit into its evolving structure, especially those accustomed to legacy project-management and waterfall models. The layoffs, Krithivasan told Moneycontrol, were part of making TCS a “future-ready organisation” with a leaner, more product-aligned workforce  .

Thousands laid off by Microsoft, Intel

Meanwhile, tech giants such as Microsoft delivered tens of thousands in reductions — over 15,000 jobs in its third round of cuts — framed internally as necessary steps for transformation into an AI-first firm. CEO Satya Nadella described the move as part of an industry-wide “process of unlearning” and pivoting toward automation-driven efficiency.

Intel, which recently, announced its move to eliminate about 24,000 jobs, said that it wanted to be a “smaller” and “more efficient” organisation. Intel CEO Lip-Bu Tan didn’t directly mention AI as the driving force behind the organisational restructuring but in an earlier interview said that it was too late for the company to catch up with Nvida in the AI race.

Despite all this, there’s growing concern that AI is being used as a convenient scapegoat. Industry insiders on platforms like LinkedIn and Reddit point out that most layoffs are ultimately driven by cost pressure and macroeconomic slowdown — not just AI disruption.

As investors demand higher margins and technology becomes more capable of automating monotonous tasks — from code generation to support tickets — the consensus is evolving: AI perhaps could be a catalyst, but not the sole reason for tech layoffs. Companies like TCS illustrate that skill realignment and changing business models are equally powerful drivers.