TCS Layoffs And Stock Crash 2025: What It Means For India’s IT Sector
A decade ago, getting placed in TCS or another big IT company was seen as a career win. It offers a reliable salary, job security and a clear career path. That expectation is now facing serious challenges.
In 2025, for the first time in nearly two decades, top Indian IT firms are firing more than they are hiring1. Added to this, TCS, India’s largest IT services company, has announced a reduction of 12,000+ roles. This is not business as usual. It suggests a deeper recalibration taking place within the sector.
The TCS layoffs’ impact on IT is not limited to workforce changes. It comes alongside a noticeable decline in the company’s stock, drawing attention across the sector. Together, the layoffs and investor reaction to the layoffs raise critical questions about the future of India’s IT sector.
Let us explore what this means going forward.
TCS Announces Layoffs: Key Facts
The Tata group’s Mumbai-based tech services arm closed June 2025 with 6,13,069 people on its payroll2. On July 28, it disclosed plans to release 12,261 employees globally, equivalent to nearly 2% of its total strength. This reduction will be phased out gradually across FY26, even as 5000 new additions were made during Q13.
According to reports, downsizing is not a response to shrinking demand. Instead, it reflects a shift in how the organisation prepares for the future. The layoffs will mainly affect mid and senior-level employees and also, juniors who have remained without project assignments for extended periods.
CEO K Krithivasan made it clear that automation, including AI tools, was not the trigger. The underlying issue lies in mismatched capabilities. Despite large-scale skilling programmes, many individuals (especially at leadership levels) could not be placed within the firm’s evolving delivery frameworks. As TCS shifts away from traditional waterfall project structures toward an agile, product-focused delivery model, the need for layered management roles is decreasing.
Affected individuals will receive financial separation benefits, continued medical cover, mental health resources and job placement assistance. At the same time, the firm continues to recruit in niche areas aligned with its updated operational model.
Here’s a snapshot of the key developments:
- Total layoffs planned: 12,261 employees (~2% of workforce)
- Roles impacted: Mid-level, senior leadership, and unassigned juniors
- Timeline: Gradual phase-out during FY26
- New hires in Q1 FY26: 5,000 employees
- Reason: Capability mismatch—not automation or AI
- Delivery model shift: From waterfall to agile, reducing need for layered management
- Support for impacted employees:
- Financial separation packages
- Continued medical coverage
- Mental health support
- Job placement assistance
- Hiring focus: Niche, future-aligned roles (product-led, agile delivery)
What do these developments mean beyond just one company? The rise in Indian IT sector layoffs signals something bigger. Time to unpack what’s really changing.
How This Impacts the IT Sector
TCS job cuts impact have laid bare evolving realities in India's tech services domain. The effects are already visible in two critical areas:
Investor Confidence Takes A Hit
IT firms are increasingly reliant on cost-optimisation-led deals, which means the same work is being done with fewer people, or more work is expected from the same teams. Typically, cost-cutting can lead to a short-term boost in stock prices, as seen in some global tech companies like Meta.
However, TCS’s decision has had the opposite effect. Its stock price has hit a cumulative 25% decline so far in 2025 (July 29)4.
Employee morale is one of the casualties. Historically, firms like TCS retained staff by offering job security, even if salaries were not the most competitive. But the introduction of the TCS bench policy, a 35-day limit on non-billable periods and deferring wage hikes has altered the employee value proposition5. Employees are now expected to be client-billable within a shorter window, or risk being moved out.
According to analysts, these steps may lead to execution issues in the short term and higher attrition over time.
Structural Shifts Are Underway
The industry's foundation is being recast. With automation gaining traction, conventional staffing models that were once built on volume and scale are being phased out. The focus is shifting towards specialised roles, reducing the need for large entry-level hiring.
This has already caused a steep drop in recruitment numbers. Two years ago, top IT companies hired nearly 6,00,000 fresh graduates annually6. That number has now fallen to around 1,50,000, with some estimates suggesting that up to 25% of freshers may remain unemployed.
Plus, capability gaps are widening. Nasscom estimates highlight a demand-supply mismatch. India needs a million AI professionals by 2026, but not even 20% of the country's IT professionals are AI-skilled7.
These trends and AI disruption in IT jobs indicate more than a temporary course correction. The layoffs in tech industry India, hint on a long-term reset in how Indian IT services are structured, staffed and scaled.
Also Read: Fastest Growing sectors In India 2025
The Effect Of Layoffs On Stock Market
On the TCS share price news, it has lagged well behind the broader indices. In the last six months, stock value fell by 25.44%8. Over a one-year window, the slide deepened to 30.22%, as of 29 July 2025.
Also, the IT stocks crash 2025 has wiped out over INR 13 lakh crore in market value in three sessions as of July 28, with the Nifty IT index leading the slide9.
What Should Investors Do Now?
TCS’s workforce decision and continued stock decline have prompted a wider reassessment of how investors should approach sector exposure. While the long-term relevance of technology remains, recent developments demand a more deliberate allocation strategy.
1. Diversify Across Sectors
Concentration in a single industry can heighten exposure to risks. Investors can consider balancing their portfolios with other sectors. As each responds differently to economic cycles, reducing reliance on any single sector.
2. Explore Fixed-Income And Alternatives
As equity-linked assets face pressure, fixed-income instruments can be a practical alternative investment option in India. Instruments such as debt-based products, structured fixed-income assets and bond investing for diversification. They can potentially offer stability and regular returns, particularly in periods of market correction.
Grip Invest provides access to curated offerings suited for varied risk appetites. These assets are typically less tied to short-term stock movements.
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3. Stay Focused on Long-Term Goals
Temporary market reactions should not override long-term financial objectives. Building wealth requires discipline, not urgency. A clear understanding of one’s timeline and risk tolerance matters more than reacting to a single headline. Regular rebalancing, rather than reactive moves, helps maintain direction amidst changing market conditions.
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FAQs On TCS Layoffs 2025
1. Are tech layoffs a sign of a bigger recession?
Not always. Workforce reductions in technology firms can reflect sector-specific changes. These include automation, shifting client demands or delayed projects. Sometimes they are cost-control measures, not economy-wide signals. Broader indicators must be assessed to understand wider risks.
2. Will the Indian IT sector recover quickly?
Too early to say. Demand recovery remains uneven across regions and verticals. Some firms are adjusting faster with focused realignment. Others face delays in execution or hiring. Workforce strategy and global sentiment will shape the pace. It won’t look the same for everyone.
3. How can retail investors protect against sector-specific shocks?
Start with balance. Relying too much on one industry adds risk. Spread exposure across different themes and asset types, like income fixed-instruments. Review holdings when market conditions shift. Avoid reacting emotionally to single events. Stay guided by personal goals, not headlines.
References:
1. The Economic Times, accessed from: https://economictimes.indiatimes.com/jobs/hr-policies-trends/techies-hired-and-fired-tcs-infosys-wipro-add-1400-jobs-but-trade-turmoil-keeps-it-headcount-in-check/articleshow/120424294.cms?from=mdr
2. The Times Of India, accessed from: https://timesofindia.indiatimes.com/business/india-business/tcs-layoffs-it-ministry-closely-monitoring-12000-job-cuts-claims-report-it-union-calls-tech-firms-move-illegal/articleshow/122967092.cms
3. LiveMint, accessed from: https://www.livemint.com/companies/news/tcs-layoffs-why-is-it-major-tata-consultancy-services-laying-off-12-000-employees-which-roles-are-at-stake-explained-11753636850943.html
4. Google Finance, accessed from: https://www.google.com/finance/quote/TCS:NSE?sa=X&ved=2ahUKEwjuxcfFkOKOAxUPRmwGHeJ5DvgQ3ecFegQIOxAT
5. The Times Of India, accessed from: https://timesofindia.indiatimes.com/technology/tech-news/what-is-tcs-bench-policy-whose-first-35-day-cycle-ended-this-month/articleshow/122954321.cms
6. BBC News, accessed from: https://www.bbc.com/news/articles/cx2p4nqd352o
7. Nasscom,accessed from: https://nasscom.in/knowledge-center/publications/state-data-science-ai-skills-india-data-and-art-smart-intelligence#
8. Google Finance, accessed from: https://www.google.com/finance/quote/TCS:NSE?sa=X&ved=2ahUKEwjuxcfFkOKOAxUPRmwGHeJ5DvgQ3ecFegQIOxAT
9. CNBC TV News, accessed from: https://www.cnbctv18.com/market/stock-market-crash-nifty-50-sensex-key-triggers-over-13-lakh-crore-earnings-trade-deal-key-levels-midcaps-smallcaps-19644562.htm
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