TCS To Freeze Senior Hiring and Salary Hikes After Layoff Announcement, Says Report; Will It Impact IT Sector?

Tata Consultancy Services (TCS) has decided to halt the hiring of experienced professionals and suspend global salary hikes, according to reports. This follows their announcement to cut 12,000 jobs, or 2% of its workforce. The IT sector is already grappling with reduced demand and the impact of artificial intelligence on jobs.

Onboarding delays for experienced hires at TCS now exceed 65 days, as per insiders. The company has begun phasing out benched employees in cities like Hyderabad, Pune, Chennai and Kolkata. These staff members must find projects within 35 days or face termination. TCS has not commented on these developments.

Seniors Hiring and Salary Hikes Freeze in TCS After Layoff Announcement: Report

According to internal sources cited by The Economic Times, the company is responding to shifts in the global tech environment, with rising demand for new-age skills and tightening budgets from global clients. By freezing senior hiring and salary hikes, TCS is aiming to rebalance its workforce and manage operational costs more tightly amid a broader push toward "future-readiness."

TCS has not yet responded to our requests for comment concerning the reported layoffs, hiring freeze at senior levels and suspension of salary hikes.

A senior employee, speaking on condition of anonymity, revealed that the internal restructuring has been underway for nearly two quarters. "We have been quietly adjusting at the employee level for some time now. Due to TCS's size and structure, this shift feels more intense. Other companies that anticipated the AI wave early have adapted faster," the person said.

New Internal Rule in TCS

Under a new internal rule, TCS employees must now find a new project within 35 days if their current assignment ends-or risk being asked to exit. The company is believed to be moving toward a leaner and more agile workforce model, especially as it ramps up its focus on artificial intelligence, cloud solutions and digital transformation services.

Will TCS Layoffs Impact IT Sector?

The decision by TCS to lay off staff has sparked discussions in IT boardrooms. Brokerage firm Jefferies described this as a potential warning sign for IT services. Their report stated that TCS's decision could lead to execution issues in the short term and higher attrition rates in the long run. The weak demand environment is reflected in most deal wins being driven by cost-optimisation initiatives involving AI-led productivity improvements.

The IT sector may face further difficulties as consulting-focused companies like Wipro and Tech Mahindra struggle with business slowdowns. Analysts note that these firms are finding it hard to keep up with reskilling and upskilling demands brought about by AI disruptions.

Meanwhile, employee welfare body NITES has written to the labour ministry complaining about "illegal layoffs." This marks their third letter concerning TCS's actions.