Layoffs Likely to Lift TCS Margins

Firm's operating margin has remained below target for five consecutive quarters

- AVIK DAS

Tata Consultancy Services' (TCS') decision to lay off roughly 12,000 employees, primarily mid- to senior-level managers, is being viewed by analysts as a move to shore up profitability rather than a shift towards an AI-driven future.

While the company cited evolving business needs and future readiness as reasons, industry experts say the action is a cost-cutting measure aimed at improving operating margins that have remained below the firm's aspirational range despite multiple efforts.

The announcement on Sunday came as a surprise to many in the Indian information and technology (IT) sector, where involuntary layoffs have typically been handled quietly. Indian IT companies, as some of the country's largest organized-sector employers, have historically avoided large-scale public cuts. The sector employs around 6 million people, according to the data from Nasscom.