After layoffs, TCS now to freeze senior hiring, pause annual salary hikes: Report

Tata Consultancy Services will freeze hiring of experienced professionals and pause annual salary increases globally, The Economic Times reported on Tuesday, as India’s largest IT services firm grapples with slowing demand and a shifting operating model.

The report follows the company’s recent announcement to cut about 12,000 jobs, or 2% of its 600,000-strong workforce, in one of the sector’s largest layoffs in recent memory.

The development has fueled anxiety in the Indian IT industry, already contending with the growing impact of generative AI and project slowdowns.

Industry executives say the company’s restructuring is being closely watched by peers.

A Jefferies note called the layoffs a “canary in the coal mine” moment, warning of possible execution slippages and longer-term attrition amid weak demand and an AI-driven push for productivity.

Firms like Wipro and Tech Mahindra may also come under pressure as clients demand AI-centric delivery and cost efficiency, analysts said.

Employee union NITES has filed a third complaint with the labour ministry against TCS, citing “illegal layoffs,” onboarding delays, and concerns over the bench policy.

TCS CEO K. Krithivasan, in an interview with Moneycontrol, said the changes reflect a shift toward product-aligned, agile models and are not directly tied to AI-led productivity gains.

“This is not because of AI giving some 20% productivity gains. We are not doing that,” he said. “This is driven by where there is a skill mismatch, or, where we think that we have not been able to deploy someone.”

The company has trained over 550,000 employees in foundational AI and 100,000 in advanced AI.

However, not all employees, particularly at senior levels, have been successfully redeployed, prompting the company to make what Krithivasan called “one of the toughest decisions” of his tenure.

While the company has not quantified the financial impact, Krithivasan said margins were not the motivation behind the move.

“But once it is visible, I am sure Samir (CFO Samir Seksaria) will call it out at the appropriate time, what will be the impact or what is the charge we are taking. The motivation is not margins, so we have not gone over this.”