1. Why did TCS announce 12,000 job cuts for FY26?
TCS announced plans to lay off 12,000 employees in FY26 due to a mismatch between employee skillsets and project requirements. CEO K Krithivasan clarified that this move is not linked to AI or automation replacing jobs. Instead, it’s a restructuring aimed at aligning talent with current business needs.
2. How did the TCS layoff news impact its share price?
Following the layoff news, TCS share price fell 1.13% on July 28 to Rs. 3,100.30. Investors reacted to potential execution risks and employee sentiment issues. Despite this short-term decline, analysts believe TCS’s strong fundamentals and consistent earnings may support a long-term recovery in stock value.
3. Are TCS layoffs related to AI automation or productivity tools?
No, the layoffs are not due to AI replacing jobs. CEO K Krithivasan specifically mentioned that the 12,000 planned job cuts stem from a mismatch in skills, not automation. He emphasized that TCS continues to use AI and productivity tools for client delivery and internal efficiency, but this move is purely about aligning talent with evolving business demands. TCS is expected to upskill many employees as part of this transition to ensure continuity and capability in core projects.
4. How are analysts reacting to TCS’s layoff announcement?
Analysts have expressed concern over the potential impact of large-scale layoffs on TCS’s delivery timelines and employee morale. While acknowledging the company’s solid earnings and strong order book, brokerages warn that abrupt workforce changes can disrupt project execution. However, with a price-to-earnings ratio of 22.76 and long-term growth prospects, many still recommend a ‘hold’ or ‘accumulate’ rating.
5. What does this mean for TCS investors in the short term?
In the short term, investors should brace for some volatility. The layoff announcement has introduced uncertainty around project execution and employee confidence. While TCS stock has dipped slightly, its fundamentals remain solid, with strong earnings, consistent dividend payouts, and global client wins. Long-term investors may see this restructuring as a necessary move to improve operational efficiency.
