AI Push Drives Record Job Cuts At Top Private Employer TCS

Tata Consultancy Services Ltd. made its steepest-ever job cuts as strained ties with the US and a rapid shift toward artificial intelligence reshape the country's $280 billion IT services sector.

India's biggest private-sector employer cut 19,755 employees in the quarter ended Sept. 30, according to the company's quarterly earnings presentation. That number includes staff fired by the company and people who left voluntarily. 

The number of employees at Asia's biggest IT outsourcer fell 3.2 per cent from the previous quarter, dipping below 600,000 for the first time since since the year ended March 2022. The company made a provision of 11.35 billion rupees ($128 million) in the quarter for severance related costs.

TCS is in the midst of a planned headcount reduction that will primarily affect the middle and senior levels due to "skill and capability mismatch," Chief Human Resources Officer Sudeep Kunnumal told analysts Thursday. It's about halfway through a target to slash 2 per cent of its workforce by March next year, as the IT services industry adapts to new technologies such as generative AI, he added.

The headcount reduction highlights a weak business outlook, analysts at Citi wrote in a note to clients. TCS's profit for the quarter missed expectations, mainly because of the one-time cost related to job losses.

US President Donald Trump's move to curtail H-1B visas, as well as the imposition of steep tariffs on India, have presented fresh challenges for the country's tech companies even as they cope with a transition to newer technologies. 

While the direct impact of tariffs may be limited, IT spending cuts and heightened geopolitical uncertainty will weigh on technology companies such as TCS, which has helped create high-skilled jobs for the world's most populous economy since the 1990s.

TCS significantly localised its workforce in the US to reduce reliance on H1B visas. "Our business model will be able to adapt quickly to any changes in immigration policy," Kunnumal said. The company will continue to hire people with "future relevant skills."