Indian outsourcing powerhouse Tata Consultancy Services (TCS) has announced plans to cut over 12,000 jobs, marking the largest layoffs ever by India’s top private employer and signaling a broader AI-driven transformation across the $283 billion outsourcing sector. Experts predict this trend could lead to as many as half a million job losses over the next two to three years.
While TCS attributes the job cuts—approximately 2% of its workforce—to skill mismatches rather than direct AI productivity gains, industry veterans see this move as the beginning of a massive shift. Roughly 12,200 middle and senior management roles at TCS will be eliminated, with similar reductions expected across peers like Infosys, HCLTech, Wipro, Tech Mahindra, and Cognizant, News.Az reports, citing Reuters.
The Indian IT outsourcing industry, which employs 5.67 million people and contributes over 7% of the country’s GDP, has historically provided upward mobility for millions of engineers. However, the growing adoption of artificial intelligence for tasks ranging from coding to manual testing and customer support is reshaping the workforce, demanding new skills many current employees do not possess.
Ray Wang, founder of Silicon Valley-based Constellation Research, describes the situation as "a massive transition that will transform white-collar work as we know it." Those most vulnerable include people managers with limited technical knowledge, testing and quality assurance staff, and infrastructure management employees providing basic tech support.
Gaurav Vasu, founder of tech market intelligence firm UnearthInsight, estimates that 400,000 to 500,000 professionals could lose their jobs within a few years, particularly those with 4 to 12 years of experience. This shift is raising concerns about broader economic impacts, including dampened consumer spending and delayed investments.
TCS, which employed more than 613,000 workers before the layoffs, says it is preparing to be “future-ready” by investing in new technologies, expanding into new markets, and scaling AI deployments for both clients and internal operations. However, the company has not clarified how many job cuts are directly linked to AI or how affected employees will be redeployed.
The layoffs have shaken employee morale, especially among mid-career professionals facing challenges securing new roles. “This is very devastating news,” said a 45-year-old TCS employee based in Kolkata who was impacted by the cuts. Other employees express concerns about recent changes, including stricter bench policies and reduced bonuses.
The sector is currently grappling with slowing revenue growth due to inflation, geopolitical uncertainties, and client demand for greater cost efficiency, which AI adoption intensifies. As Jefferies analyst Akshat Agarwal notes, clients increasingly expect “productivity benefits” that force IT firms to do more with fewer employees.
Industry body Nasscom highlights that AI and automation are fundamentally reshaping how businesses operate. Unlike previous technological disruptions felt at an organizational level, the current AI revolution places the responsibility squarely on individual workers to reskill and reinvent themselves, as former Tech Mahindra CEO CP Gurnani emphasizes.
