TCS Layoffs 2025: Strategic Realignment or Risky Transition Market and Analyst Reactions Explained

TCS to lay off 2 percent of global staff in 2025, targeting mid to senior roles. CEO clarifies no AI link, while analysts warn of execution slippage. Read full market impact, employee reactions, and TCS stock outlook after 3135.80 closing.

Tata Consultancy Services Ltd TCS, the crown jewel of the Tata Group and India's largest IT services exporter, has sparked significant conversation with its latest workforce strategy. On July 28, 2025, TCS is set to face heightened market scrutiny following its announcement to cut approximately 2 percent of its global workforce, targeting primarily mid- and senior-level employees.

This move, which the company insists is not AI-driven but rather a realignment of skills with current deployment feasibility, signals a significant shift in how Indian IT giants are adapting to rapid technological evolution, global delivery demands, and margin pressures. Analysts, however, are raising flags not about the layoffs per se, but about whether the company can execute such transitions without slipping.

What Has TCS Announced

On July 25, TCS revealed its plan to cut 2 percent of its global workforce during FY25, with the layoffs mainly impacting mid-level managers, project leaders, and certain senior personnel. Although the company described it as a step towards building a future-ready organization, the decision’s timing and focus on experienced employees have raised eyebrows.

While 2 percent may sound modest in percentage terms, TCS employs over 600000 people globally. This could potentially translate to around 12000 job cuts.

Importantly, the company clarified that this is not a cost-cutting exercise, but a necessary measure to align skills with project demands, reduce managerial redundancy, and streamline internal deployment mechanisms.

CEO Speaks: This Is Not About AI

In an interview with Moneycontrol, TCS CEO K Krithivasan was quick to address public assumptions that these layoffs were linked to automation or artificial intelligence AI replacing human roles.

This move is not related to AI. It is not that we need fewer people. It is about the feasibility of deployment—having the right people in the right roles. We are continuing to hire and invest in training talent.

Krithivasan emphasized that reskilling, upskilling, and redeployment will continue across TCS. The layoffs, he said, address inefficiencies—not technological disruptions.

This makes TCS’s move distinct from global peers who are trimming staff due to automation or GenAI tools. Instead, it points to a strategic rejig to remove managerial bloat, empower agile teams, and build talent pipelines for high-demand verticals like cloud, analytics, cybersecurity, and digital consulting.

The IT Sector's Post-COVID Correction

This announcement is part of a broader trend within India’s IT industry. The Covid-19 pandemic prompted a hiring frenzy as companies scrambled to digitize operations and onboard tech talent at scale. But as global demand stabilized, these same companies are now course-correcting.

Headcount Changes in the Last 2 Years
TCS decreased by 2249 employees
Infosys decreased by over 12000 employees
Wipro decreased by over 25000 employees

Clearly, the Indian IT sector is experiencing a talent recalibration phase. Roles in legacy systems, middle management, and non-billable functions are increasingly being reconsidered.

Analyst Sentiment Citi Warns of Execution Slippage

While TCS has presented the move as a forward-looking business adjustment, analysts are less optimistic. In fact, global brokerage firm Citi has reiterated its Sell rating on the stock, maintaining a target price of 3135—a notable markdown from its pre-layoff sentiment.

Citi’s major concern is execution slippage.

This means the strategy may be sound, but its implementation could falter, leading to
Disruptions in ongoing client projects
Erosion of institutional knowledge with experienced employees leaving
Drop in morale and productivity of retained staff
Delays in fulfilling new client demands due to skill gaps

With mid- and senior-level employees often managing client relationships, change management, and project transitions, the risk of operational friction is real.

Employee Reactions Mixed Emotions

Inside TCS and across industry forums, the mood is cautiously tense. Employees, especially those with 10 to 20 years of experience, are now uncertain about career progression. Many worry about a shrinking middle layer, with future opportunities centered more on tech skills than leadership tenure.

A few common sentiments on professional platforms
It feels like loyalty no longer matters in IT
If you are not constantly reskilling, you are disposable
Too much hierarchy had to go, but how will they manage delivery with fewer leads

While the layoff percentage is small, symbolically it signals a new reality—one where even seniority does not guarantee job security unless accompanied by in-demand tech expertise.

Market Watch: What Investors Should Expect

TCS shares closed at 3135.80 on Friday, July 25, 2025, just before the news started circulating widely. Market watchers are bracing for a possibly muted or negative reaction when trading resumes Monday.

Investor concerns stem from
Short-term execution hiccups
Pressure on revenue growth amid global demand volatility
Cautious client IT spending in the US and Europe

That said, if management communicates clear reskilling initiatives, client retention strategies, and a seamless transition roadmap, the selloff could be limited.

Technical and Fundamental Snapshot

Fundamentals as of July 25, 2025
Stock Price 3135.80 closing
PE Ratio 27.5x moderately overvalued
Dividend Yield 1.3 percent
Return on Equity ROE 38.2 percent
Cash Reserves Approx 50000 crore

Technical Indicators
Support Level 3100, watch this closely on Monday
Resistance Level 3300
Relative Strength Index RSI 42 neutral to bearish
50-Day Moving Average DMA 3180 stock is now trading below this

If TCS breaks below the 3100 support level with high volume, it could indicate further downside. Conversely, if it stabilizes and sentiment improves, the stock might consolidate or stage a mild rebound.

Future Outlook: Threat or Opportunity

TCS is facing a moment of truth. This layoff, though not massive in number, represents a deep strategic and cultural shift. The company is transitioning from a traditional service-led model to a productized, AI-ready, and skill-centric delivery ecosystem.

This move could either help TCS evolve into a more efficient, adaptable organization or backfire by unsettling its workforce, creating client uncertainty, and potentially hindering growth.

What will determine the outcome is execution. Not the plan, but how it is carried out.

If TCS succeeds in reskilling, preserving client trust, and empowering its remaining workforce, this move could future-proof the company.

If not, it may find itself losing ground to faster-moving competitors like Infosys, Accenture, and Cognizant in the post-AI enterprise era.

Author’s Note

The wave of workforce transformation in India's IT sector is both painful and necessary. Companies like TCS must balance efficiency with empathy, and vision with execution. As technology redefines roles and client expectations, the winners will be those who adapt swiftly without losing their core values or their people.

Let us hope TCS leads by example—not just with profits, but with purpose-driven transformation that benefits clients, employees, and shareholders alike.

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