Tata Consultancy Services (TCS) laid off 12,000 employees. Every hot take I've read misses the most important detail: WHO got laid off. This is what actually matters in today’s story.
These layoffs target mid-to-senior roles - a complete departure from traditional layoffs that historically hit junior ranks first. These are people with up to 15 years of experience and commanded premium pricing in the traditional services model. TCS is now saying they are the ones whose "deployment may not be feasible”.
We're basically witnessing AI disruption move up the corporate ladder. The conventional wisdom that experience and seniority provide job security is being rewritten in real time.
If AI can handle knowledge work and project coordination, then senior consultants/managers become expensive redundancies rather than valuable assets. Experience without AI fluency is becoming a liability.
Moreover, TCS headcount hasn’t moved meaningfully moved in 4 years, hovering around 6 lakh employees, even as topline grew 33% and profits 27%. This means net hiring was effectively paused after pandemic overhiring. They've been doing more with the same people because AI can deliver comparable output faster and cheaper.
The timeline is brutal. In the industrial era, we had two generations to adapt. With computers, one generation. And three years for AI. Senior professionals who spent decades building expertise in legacy systems and traditional consulting approaches suddenly find themselves on the wrong side of technological disruption. The challenge is teaching every old dog new tricks in record time - and that's not easy.
Labour spend is many times that of software spend across most businesses. AI's TAM is massive precisely because it can address these labour costs. The fastest casualties are repetitive tasks in BPO, customer support, and knowledge work - the backbone of India's service economy. AI agents are taking over these tasks faster than people can retrain.
Yes, TCS has significant moats. Their existing large contracts with Fortune 500 clients provide stability. But even with these advantages, TCS reported a weak Q1, showing that client gravity alone isn't enough. They are combining their distribution strength with genuine AI product capabilities. Consolidation is coming for the mid-market players without these advantages.
This isn't just a TCS story. You will be mistaken if you think this is the end of it.