'AI is Just An Excuse, Profitability Real Reason Behind Mass Layoffs at TCS'

*Names have been changed to protect the identity of those cited in the story. Tata Consultancy Services (TCS), the country’s largest employer and services provider, is going through a major upheaval. The IT services giant, last week, announced cutting short their workforce by 2 percent or over 12,000 people largely due to incorporating AI models at scale. And this came just weeks after TCS announced a new bench policy on 12 June, which already has its employees on the edge. The All India IT and ITES Employees Union (AIITEU) asserted, however, that TCS is using Artificial Intelligence as a façade to hide its mismanagement. “TCS is using the bench policy and layoffs as weapons to optimise its profits,” AIITEU General Secretary Saubhik Bhattacharya told The Quint. The union alleged that while numerous employees are being forced to resign, there are hundreds who were hired earlier this year but still haven’t been onboarded. “I have already resigned from my previous company and was supposed to start at TCS on 21 July. But my onboarding has been delayed. It’s been two weeks that I am out of work and out of pay,” claimed Gautam*, an IT analyst from Bengaluru.In this story, The Quint sheds light on the sheer helplessness of hundreds of graduates and experienced professionals, who are left with no means to run their livelihood thanks to TCS’ unilateral policies. “On 17 February, my reporting manager called me and asked me to write an email that said I am resigning. I was asked to leave within the next five days. As I had been on the bench, I was offered no extra compensation or severance package,” claimed Anagha*, a 27-year-old IT analyst, who had worked three years at TCS before she was laid off. Ideally, a severance package should include three months’ salary plus 15-days pro-rated wages for each year of service. On 12 June, TCS introduced a new bench policy. To understand what it entails, Bhattacharya first explained the flow of work at TCS: According to TCS’ new bench policy, if an employee is on the bench for more than 35 days spread across a year (or an average three days is a month), he/she is liable for strict disciplinary action including cessation of services. “The problem with this policy is that it puts the onus of finding billable projects on the employees, when it should be the organisation’s prerogative. IT engineers are now expected to dig into their personal contacts and find billable work for themselves, otherwise they’ll be fired,” Bhattacharya said. He added that several other IT firms follow a similar policy, but an employee faces action if he/she has been on the bench for 35-60 days in a row and not across a year. However, Anagha was forced to resign months before the new policy was announced. “I joined TCS as a fresher three years back. I wasn’t awarded any billable project. But nowhere in my offer letter does it mention that I would be fired if I wasn’t allocated a project,” Anagha claimed. The AIITEU launched a helpline for aggrieved TCS employees on 30 July and Bhattacharya claimed to have received more than 1,000 calls within 36 hours.In response to The Quint’s detailed questionnaire over the allegations of its employees as well as AIITEU, TCS said: “TCS is on a journey to become a Future-Ready organization. This includes strategic initiatives on multiple fronts including investing in new-tech areas, entering new markets, deploying AI at scale for our clients and ourselves, deepening our partnerships, creating next-gen infrastructure and realigning our workforce model.” The statement added that as part of this journey, TCS will be releasing associates whose deployment isn’t feasible. However, Bhattacharya argued that this was an excuse and the real reason behind the mass layoffs was TCS’ mismanagement and its fixation with increasing profit margins. He explained: “In the international market, IT firms bid for billable projects based on the strength of their manpower. Post-Covid, TCS had hired lots of people to acquire lots of projects, which didn’t renew over time. This over projection and over casting is now compelling them to downsize. This has got nothing to do with the employee’s performance.” Bhattacharya claimed that despite this, TCS hired nearly 1,500 professionals earlier this year who have still not been onboarded.“I received my offer letter from TCS on 14 May and resigned from my current workplace four days later. I served a notice period of two months. A week before my joining date on 21 July, I got a call from TCS saying that my onboarding has been delayed,” Gautam told The Quint. He claimed that TCS did not provide a reason or an email confirmation regarding the same, even when he sought it. 15 days after the promised joining date, Gautam still has no clarity on when he will be onboarded. He claimed that there has been no response from TCS’ Human Resources (HR) department despite numerous calls. “If they would’ve informed earlier, I wouldn’t have resigned from my previous firm. I have already lost half a month’s wages. I am the only earning member of my family—I have a six-month-old daughter and elderly parents to support. I don’t know what to do,” the 32-year-old lamented. Gautam said that the uncertainty has worsened his mental health. “The job market is poor and expenditures are constantly rising. There’s no respite in sight,” asserted the IT analyst, with six years of experience. Although TCS, in its response to The Quint, did not specify the number of professionals awaiting onboarding or the number of employees who have been asked to resign, it did state: “We understand that this is a challenging time for our colleagues likely to be affected. We thank them for their service, and we will be making all efforts to provide appropriate benefits, outplacement, counselling, and support as they transition to new opportunities.” However, AIITEU claimed that TCS was not being considerate. “I was two months pregnant when I was let go. I requested my manager to increase my notice period or provide any sort of support but in vain. It has been six months, and I still have no offer from any firm. I guess it's the downside of being a woman,” Anagha rued. She claimed that her pregnancy was an added disadvantage as any firm wouldn’t hire someone who goes on a maternity leave months after joining. “This will lead to a big gap in my career and only worsen my prospects. How will we survive on half the household salary with a baby on the way?” Anagha mourned. She added, “If TCS takes me back, I’ll join at the salary I left, which is a little over Rs 22,000 a month.” The AIITEU also flagged numerous issues with the starting salaries and the pay structure at TCS. Bhattacharya claimed that at many TCS verticals, the starting monthly salaries fall in the Rs 25,000-Rs 28,000 bracket. “Nearly 30 percent of the Cost to Company (CTC) gets cut because of the Quarterly Variable Pay, which depends on how the company performs,” he claimed. According to TCS’ annual report for FY 2024-25, the median salary of the board of directors is over Rs 2.74 crore per annum, while that of key managerial personnel is Rs 7.77 crore per annum. Besides, the total remuneration for K Krithivasan, CEO & MD of TCS, is Rs 26.5 crore per annum, after it was appraised by 4.6 percent in FY 2025. “TCS was one of the few firms which clocked profits even during the Covid pandemic. Even though the profits hardly seem to be percolating to its workers. On the one hand, the salaries of C-level employees saw an increase, and on the other appraisals for the current financial year have reportedly been frozen,” Bhattacharya said, reiterating that layoffs are being done only to increase profitability. Several unions of IT employees have written to the Union Ministry of Labour and Employment over TCS’ layoffs and bench policy. In their response to The Quint, TCS stated that the reskilling and redeployment initiatives are set to impact about "2 percent of its global workforce, primarily in the middle and the senior grades, over the course of the year."The Quint had earlier reported that middle and senior level employees at several IT firms and tech startups are staring at early retirement because of several factors including their high cost to the company as well as changing landscapes due to AI. “Innovation is driving employment in this space, and smooth sailing into 60’s is not a reality anymore. The choice is clear—either upskill or become obsolete,” posited Kanan Bahl, who is a chartered accountant and a financial researcher. Project Managers at reputed IT firms are seen enrolling themselves for PG Diploma courses on Generative AI. Bahl also recommended managers to save more using the Employees’ Pension Scheme (EPS) or National Pension Scheme (NPS) and invest wisely so as to have a financial cushion for contingencies.

BECOME A MEMBER

'AI is Just An Excuse, Profitability Real Reason Behind Mass Layoffs at TCS'

Forced Resignations, Delayed Onboarding, Bench Policy, Stagnating Salaries: Just What is Going on at TCS?

Read Latest News and Breaking News at The Quint, browse for more from jobs

Topics: Tata Consultancy Services TCS Artificial Intelligence