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Tata Tread Carefully: Indias Largest It Firm Bracing For Ai-Driven Layoffs
The Indian IT industry, once a bastion of stability and growth, is undergoing a significant transformation in the wake of the AI revolution. The recent layoffs by top players like Meta, IBM, and Microsoft have sent shockwaves through the sector, with many wondering if this trend will extend to India’s own IT giants.
Tata Consultancy Services (TCS), the country’s largest IT services firm, is at the forefront of this transformation. According to a report by Moneycontrol, TCS plans to reduce its workforce by 2% by 2026, impacting approximately 12,000 jobs primarily at the middle and senior levels. This decision has been met with mixed reactions from investors and analysts, who point out that while the layoff may seem significant, it represents a relatively small percentage of the company’s overall workforce of 6.13 million employees.
TCS CEO K. Krithivasan has been clear that AI is not the sole reason for this decision, but rather one part of a broader strategy to modernize the company and adapt to changing market conditions. The firm’s CFO, Samir seksaria, attributed the reduction in software expenses to a completed transformation deal, while COO Aarthi Subramanian highlighted the potential for AI to drive productivity gains across various sectors.
The key area where TCS is investing heavily is in agentic AI, which refers to AI systems that can reason and act autonomously. This technology has the potential to revolutionize industries such as BFSI and manufacturing, enabling companies to scale their operations more efficiently and effectively. Subramanian emphasized the importance of agentic AI in client conversations, noting that clients are increasingly shifting their focus from use case-based approaches to ROI-led scaling of AI.
TCS has been cautious about its adoption costs, with CFO seksaria attributing a significant drop in software license expenses to the completion of a transformation deal. However, this decrease does not necessarily indicate a decrease in overall AI-related spending. The firm’s aggressive bench policy, mandating 225 billable days per year, with only 35 days of allowable non-billable time, suggests an attempt to automate certain tasks and focus on delivering outcomes at AI-driven speeds.
Beyond the numbers, there is a more profound narrative at play. TCS’s decision represents a significant shift in the company’s approach to talent management and development. The firm has rolled out this new policy as part of its modernization efforts, which includes a broader strategy to invest in emerging technologies and drive growth through innovation.
As Indian IT engineers navigate the challenges of coding and adapting to these changes, there is a growing sense that the industry must innovate and adapt quickly to remain competitive. The implications of TCS’s decisions will be closely watched by investors, analysts, and stakeholders alike. One thing is clear: the future of work will be shaped by technological advancements, and companies like TCS must adapt quickly to remain relevant.
The rise of agentic AI has the potential to disrupt traditional approaches to software development and deployment, forcing companies to rethink their strategies and invest in new technologies. As TCS continues to navigate this complex landscape, it remains to be seen whether its approach will pay off or if other players will follow suit.
TCS’s modernization efforts are part of a broader trend in the industry, where companies are investing heavily in emerging technologies to stay ahead of the curve. However, the pace and extent of this transformation remain uncertain, leaving many questions unanswered. The $200 million question surrounding TCS’s software spend remains unresolved, but regardless of the answer, one thing is clear: the Indian IT industry must prioritize innovation and adaptation in response to the AI revolution.
As the company continues to navigate its modernization efforts, there are several factors that will shape its future success. These include the pace of adoption, the effectiveness of its talent management policies, and the ability of its leadership to drive growth through innovation. By embracing new technologies and investing in emerging areas like agentic AI, companies like TCS can position themselves for long-term success and remain relevant in a rapidly changing landscape.