Tata Consultancy Services (TCS), India’s largest IT exporter, has executed its steepest-ever workforce reduction, trimming nearly 20,000 employees in the past quarter. The move, driven by pressures from artificial intelligence and uncertain US trade policies, has reduced the company’s total headcount below 6,00,000—a level not seen since 2022. Over the span of just three months, TCS reduced its workforce by 19,755 employees, a 3.2% decline from the previous quarter, according to its latest earnings report. The company has allocated Rs 11.35 billion to cover severance-related costs.

Trimming Mid- and Senior-Level Roles

TCS Chief Human Resources Officer Sudeep Kunnumal told analysts that the restructuring primarily targets mid- and senior-level employees affected by a “skill and capability mismatch,” as reported by Bloomberg. The company is roughly halfway through its plan to reduce 2% of its global workforce by March 2026. This initiative aligns with TCS’s broader strategy to focus on AI and automation-led services, emphasising technology-driven efficiency over traditional manpower.

Investor Concerns Amid Weak Outlook

Analysts at Citi noted that these layoffs reflect a cautious business outlook, pointing to slowing global demand and tighter IT budgets. Quarterly profits fell short of expectations, largely due to one-off costs linked to the job cuts. The downsising highlights how even India’s most stable IT firm is adjusting to the evolving digital economy.

External Pressures from US Policy

The workforce reductions also come amid rising geopolitical tension. US President Donald Trump’s proposed increase in H-1B visa fees to $100,000 (Rs 88.7 lakh) and potential tariffs on Indian imports have heightened uncertainty for India’s IT majors. While the direct tariff impact on TCS may be limited, the company remains concerned about reduced IT spending from American clients, who constitute the bulk of its revenue.

Pivot to Localisation and Future Skills

To counter policy risks, TCS has been localising its US workforce to reduce dependence on foreign work visas. “Our business model can adapt quickly to immigration changes,” Kunnumal said, emphasising that TCS will continue hiring talent with “future-relevant skills” like AI, machine learning, and data analytics. This shift reflects a broader trend in India’s IT sector, moving from labour-intensive outsourcing to smarter, tech-driven operations that prioritise innovation and specialised expertise.

As automation and artificial intelligence continue to redefine the global technology landscape, TCS’s unprecedented job cuts may signal a wider transformation across India’s IT industry—transitioning from sheer manpower to high-tech mastery.