Home / Business and Economy / IT Giant TCS to Lay Off Over 12,000 Employees in Surprise Move
IT Giant TCS to Lay Off Over 12,000 Employees in Surprise Move
27 Jul
Summary
- TCS to lay off 2% of its workforce, over 12,000 employees
- IT sector facing slowdown, with revenue growth ranging from -3.1% to 3.8%
- Indian IT firms criticized for prioritizing shareholder returns over long-term investments
In a significant development, Tata Consultancy Services (TCS) revealed on Sunday that it will be letting go of over 12,000 of its employees, which amounts to 2% of its total workforce. While the company has attributed this move to its "evolving journey," industry observers have noted that the IT sector is facing a broader slowdown.
The latest quarterly results for leading Indian IT firms paint a concerning picture. TCS, Infosys, HCL Tech, and Wipro all reported constant currency revenue growth ranging from a negative 3.1% to a positive 3.8%. This marks the worst revenue performance for TCS as a listed company, excluding the COVID-19 pandemic's impact. Furthermore, the growth rates for Infosys and HCL Tech are considered sub-par compared to their historical performance.
Experts argue that the IT sector's reliance on the offshoring wave and an asset-light business model has reached a critical juncture. While global tech giants like Microsoft and Amazon have invested heavily in cloud computing, Indian IT firms have prioritized shareholder returns over long-term investments. Over the past decade, the "Big Four" Indian IT companies have returned a staggering ₹6.2 lakh crore to shareholders through dividends and buybacks, while their capital investments amounted to just ₹90,000 crore.
This shift in focus has left Indian IT firms ill-equipped to adapt to the changing global technology landscape, particularly in the era of artificial intelligence. As the industry faces a challenging period, the IT majors must now confront the consequences of their strategic decisions and explore ways to regain their competitive edge.
