Govt Summons TCS Over Layoffs And Delayed Onboarding Of New Recruits

New Delhi: The Ministry of Labour has summoned Tata Consultancy Services (TCS) over its recent plan to lay off around 12,000 employees, nearly 2 per cent of its workforce.

The development occurred following a meeting between the Nascent Information Technology Employees Senate (NITES) and the office of the Chief Labour Commissioner (CLC).

TCS has been summoned for two reasons, first, for laying off thousands of employees, and second, for the delayed onboarding of 600 professionals.

Meanwhile, according to a report by Jefferies, the recent report of layoffs by Tata Consultancy Services' as part of cost-cutting measures could negatively impact the company in the long run.

The report noted that this move reflects the company's increasing focus on conserving margins amid persistent growth challenges. It is also third such cost-saving action taken by TCS in the past three months. 

Earlier, the IT giant deferred wage hikes in April 2025 and introduced new benching guidelines in June 2025. The updated benching policy now limits the non-billable period of an employee to just 35 days in a year. 

Jefferies stated, "Focus on cost-cutting may hurt TCS in longer-run...: The move by TCS reflects its growing focus on conserving margins amid continued growth pressures" 

According to the report, TCS has historically not been among the top paymasters in the industry, but it has managed to maintain lower-than-average attrition levels due to its focus on providing long-term career growth and job stability. 

However, the report cautioned that the current round of layoffs could damage employee morale in the near term and potentially lead to execution slippages. 

In the longer term, such cost-cutting measures might result in a sharp rise in attrition, similar to the trend witnessed at Cognizant between 2020 and 2022. 

While the layoffs at TCS appear to be more company-specific, Jefferies highlighted that the overall net hiring in the IT industry has remained weak since FY22. This is mainly due to a prolonged moderation in the demand outlook.

With inputs from ANI