Tata Consultancy Services (TCS), India’s largest IT services company, is under intense scrutiny following allegations from employee unions that the company carried out large-scale layoffs through coercion and in violation of labour laws.
Responding to queries from AIM, TCS denied the claims, stating that the allegations were “incorrect and misleading” and that those affected had been provided due care and severance in line with individual circumstances.
The company just announced its second-quarter results for FY2026. Its reported consolidated revenue was ₹65,799 crore and net profits ₹12,904 crore, reflecting a modest 3.7% quarter-on-quarter increase in revenue and an 8.4% year-on-year rise in net profit.
The results also included a one-off restructuring expense of ₹1,135 crore.
The expense is attributed to the company’s plan to trim its workforce and realign roles across the organisation.
The Restructuring
While TCS recorded a net reduction of about 19,755 employees, unions claim the actual number of employees exiting the company during the quarter could be more than the reported figure.
However, the company has maintained that only 6,000 of these departures were involuntary, indicating that the rest (13,755) were voluntary.
Besides, TCS’s voluntary attrition was 13.3% (LTM) in Q2 FY26, a reduction from 13.8% in the previous quarter.
In a recent interview, TCS CEO and MD K Krithivasan said the company continues to invest heavily in training and upskilling to make its workforce future-ready.
However, as the nature of work and required capabilities evolve, a small section of employees, about 2% of the total workforce, may not fit into the future TCS despite retraining.
In Q2, the company released roughly 6,000 employees, he informed.
“All were provided fair severance packages and, where applicable, outplacement support,” Krithivasan said.
He clarified that the reported 19,755 reduction in headcount reflects a combination of factors, including regular attrition, new hiring, redundancies at senior levels, and some involuntary attrition at junior levels under the company’s bench policy.
“The 6,000 redundancies were based on skill and capability mismatches and form one component of the overall reduction,” he added.
Troubling Experiences?
Employee unions, however, assert that many employees were effectively forced out through aggressive and inhumane measures.
A joint statement from Suhas Adiga of the Karnataka State IT/ITES Employees Union (KITU), AD Jayan of the Association of IT Employees (AITE) in Kerala, and Alagunambi Welkin of the Union of IT and ITES Employees (UNITE) in Tamil Nadu described troubling experiences faced by employees.
They alleged that many were moved from projects to the bench without notice and pressured to resign immediately. Others were denied new project opportunities despite clearing interviews, leaving them no option but to leave.
TCS had introduced a significant change to its talent deployment policy, setting a new benchmark for employee utilisation. Under the revised guidelines, all employees are now mandated to be billed for a minimum of 225 days, with a reduced allowable bench time of 35 days per year.
Employees dealing with serious personal or health issues reportedly faced insensitivity from management, with some threatened with termination if they could not continue working. Female employees on maternity leave or those who had recently returned were allegedly forced to come back to the office or faced threats of resignation.
In some instances, employees who refused to resign were warned that their future careers would be sabotaged, and separation meetings reportedly involved the collection of phones and digital devices to prevent communication or evidence of coercion.
Unions have also challenged TCS’s claims of providing “generous severance packages,” stating that many employees have not received the promised three-month compensation, with some forced to resign without any severance at all.
Legal Violations?
The unions warn that TCS’s actions may constitute a violation of the Industrial Disputes Act, which mandates prior government approval for mass terminations, and have demanded immediate intervention from both the state and the Union governments.
Under the Industrial Disputes Act, 1947, companies employing 100 or more workers must obtain prior government approval before retrenching employees (Section 25N) or closing an establishment (Section 25-O).
Employers are required to notify the government and affected workmen, provide compensation or notice in lieu, and submit an application detailing the reasons for retrenchment or closure.
Failure to comply renders the action illegal and void, making adherence to these procedures mandatory.
On July 30, KITU filed an industrial dispute with the Karnataka labour department, accusing the IT giant of violating provisions of the Industrial Disputes Act, 1947.
The proceedings between TCS management and the Karnataka State IT/ITES Employees Union (KITU) are currently underway before the Labour Department.
Karnataka labour minister Santosh Lad had said, “As per law, any company which is planning to remove its employees from work has to inform the labour department. But there is no intimation from them to us. Therefore, we have sought the details,’’ he said.
Harpreet Singh Saluja, advocate of the Bombay High Court and president of the Nascent Information Technology Employees Senate (NITES), said that behind every exit lies a story of fear, anxiety, and broken trust.
“At NITES, we continue to hear from employees who were asked to resign voluntarily or told they were no longer part of the company’s ‘future-ready’ vision,” he said, adding that many of these employees had served TCS for over a decade. “Instead of being retrained or upskilled, they were quietly shown the door. If the company truly believed in being ‘future-ready,’ it should have invested in its people, not discarded them.”
Saluja also highlighted concerns that the large-scale terminations were “carried out without mandatory government permission”, making these actions not only unethical, but potentially illegal.
TCS has framed the layoffs as part of its “Future-Ready” agenda, aimed at deploying AI at scale, investing in next-generation technologies, and expanding into new markets.
About 12,000 employees, mostly in mid- and senior-level roles, are expected to be released as the company realigns talent toward growth areas like AI and cloud.
While TCS describes this as a careful transition with no impact on clients, unions argue it signals a major cultural shift in how India’s largest IT employer treats its workforce.
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