TCS Stock Dips As Layoffs Blamed On Skill Mismatch

Today, July 28, 2025, Tata Consultancy Services (TCS), a bellwether of the Indian IT sector, saw its shares decline. This dip follows the company’s recent announcement of a significant global workforce reduction. Management has primarily attributed these TCS layoffs to a “skill mismatch” within its employee base, signaling a strategic realignment for a “future-ready organization.”

Understanding the TCS Layoffs and Workforce Restructuring

TCS confirmed it plans to cut approximately 2% of its global workforce, impacting around 12,000 employees over the course of the year. The focus of these reductions is largely on middle and senior-grade employees. CEO K Krithivasan clarified that this decision is not driven by AI-led productivity gains or a need for fewer people overall. Instead, he emphasized that it’s about addressing specific instances where employee deployment is not feasible due to a gap between existing skills and evolving project requirements. TCS continues to seek high-quality talent, investing in acquiring and training new and existing associates.

This move comes after a period of significant hiring spree during the COVID-19 pandemic. However, Indian IT companies, including TCS, Infosys, and Wipro, have seen a decline in headcount over the last two years as the industry adjusts to new realities and technological shifts.

Market Reaction and Analyst Views on TCS Share Price

The TCS share price reacted to the news, falling over 1% in early trading on Monday. This decline adds to a prior 10% dip in the last month, even before this specific layoff announcement. Analyst perspectives on the move are varied. Citi has maintained a “sell” recommendation on TCS with a price target of ₹3,135. They suggest that multiple factors could be at play, including pressure on margins, shifting demand, skill mismatch, and ongoing productivity demands from clients.

Jefferies, another prominent brokerage, noted that this restructuring could lead to short-term execution slippages. In the long term, it might even result in higher attrition. They highlighted that many current deal wins are driven by cost-optimization initiatives, often involving AI-led productivity, pushing IT firms to adapt their workforce to maintain market share.

Broader Industry Trends and Future Outlook for Indian IT

The TCS layoffs underscore broader trends impacting the Indian IT industry. The sector is navigating macroeconomic uncertainties, evolving client demands, and the accelerating integration of artificial intelligence and automation. Companies are increasingly seeking to optimize their operations and talent pool to stay competitive. This means a sharper focus on upskskilling and reskilling employees to meet the demands of emerging technologies.

Despite the recent share dip and workforce adjustments, a majority of analysts still hold a “buy” rating on TCS, with 32 out of 51 analysts recommending it, 15 suggesting “hold,” and only four advocating a “sell.” This indicates a prevailing belief in TCS’s resilient business model and long-term potential, even as it undergoes necessary transformations to remain a “future-ready organization” in a dynamic global technology landscape. The company has also assured support for impacted employees through severance and outplacement assistance.

Understanding the TCS Layoffs and Workforce Restructuring

Market Reaction and Analyst Views on TCS Share Price

Broader Industry Trends and Future Outlook for Indian IT

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