TCS will lay off 12000 employees in the middle and senior management over the next 12 months which is 2% of their global work force

 As we know , TCS will lay off 12000 employees in the middle and senior management over the next 12 months which is 2% of their global work force


The company clarified this is not because of AI but rather due to a skill mismatch where they are unable to redeploy employees due to a skill gap

The situation in the tech sector is grim and the worry is that the other larger tech companies will follow suit with layoffs

So , what exactly is happening ? why has demand been hit so much in the last 2 years ?

Much of the traditional outsourcing like manual testing, support, low level coding is being automated rapidly
Business is slow , deal sizes are declining , project ramp ups are delayed , client spends are being curtailed

2 reasons:

- Automation is improving
- Rise in GCCs or global capability centres

Clients are now interested in AI native solutions and not just buzz words
Tech is evolving fast
Companies that pivot to AI services, build deep domain capabilities and automate their delivery models will survive
If you are in tech , especially in services , this is a good time to upskill to AI/ML , data, product roles

Another thing to consider is the rapid rise of GCCs - basically foreign companies setting up their own offices in india

Tech jobs are now being shifted to GCCs or global capability centres , which are in house IT teams of large clients

This is a saving grace for Indian employees but not a good thing for tech companies like Infosys and TCS

Why would someone outsource work to TCS when they can hire a small team in their own company to do the same job at a lower price ?
Big banks like JP Morgan and Goldman sachs would earlier outsource their tech work to TCS and Infosys for cheap labour and technical expertise
Today, these companies have set up huge offices in india where they are doing the same job by hiring people directly and its working out to be cheaper
GCCs are growing rapidly in india and every person they hire is a potential loss for companies like TCS and infosys

The big takeaway is that tech companies are just too late to move from service to product innovation, and now the cows are coming home to roost

Remember , Indian tech majors over the last 30 years had an absolute monopoly due to huge supply of labor at cheap price but now the west has cut down efforts massively though Gen AI and Agentic AI etc so the monopoly itself could fade away

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