TCS may freeze salary hikes and senior hiring after 12,000 layoffs: Report

Tata Consultancy Services (TCS), India’s largest software services exporter, may suspend annual salary hikes and pause hiring of experienced professionals globally, according to a report by The Economic Times published on 29 July 2025. The move comes shortly after the company reportedly initiated plans to lay off approximately 12,000 employees—equivalent to about 2% of its global workforce.

Citing individuals familiar with internal developments, The Economic Times said the company has also tightened its internal policy for bench employees—those not currently deployed on billable client projects. These employees will now have a 35-day window to find a project or exit the company, a marked shift from TCS’s traditionally more flexible redeployment approach. The process of letting go of benched employees has already begun across key delivery centres, including Hyderabad, Pune, Chennai and Kolkata, the report added.

This apparent policy shift reflects broader cost-optimisation efforts underway within the company. An internal communication to employees, reviewed by ET, cited global trade slowdowns and macroeconomic uncertainty as drivers of the changes. In addition to tighter internal cost controls, onboarding delays for lateral hires have reportedly stretched beyond 65 days, adding to the growing sense of caution in the firm’s near-term talent planning.

While TCS has not officially confirmed the reported layoffs or hiring freeze, CEO K. Krithivasan has previously acknowledged the company’s need to adapt to structural shifts in client expectations. In its June-quarter earnings call, Krithivasan noted that TCS was recalibrating its operating model in light of slower deal ramp-ups and greater client scrutiny over discretionary spending. The company reported a 9.4% year-on-year rise in consolidated net profit in Q1 FY26 but flagged headwinds from delayed project starts and margin pressure.

TCS shares have mirrored the uncertainty, falling nearly 12% over the past month. The stock is down 25% year-to-date and has lost nearly 30% from its 52-week high, underperforming most of its peers in the Nifty IT index. The market reaction suggests investor concerns about both the firm’s growth visibility and its ability to manage human capital while navigating a changing technological landscape.

The developments at TCS follow a period of widespread slowdown across the global IT services industry. According to data from Nasscom and public filings by top-tier firms, hiring in the Indian tech sector fell sharply in FY25, with a shift toward junior-level hiring, gig work, and outcome-based project staffing. Generative AI is also beginning to reshape resource allocation, with large IT firms rethinking pyramid structures and internal productivity benchmarks.