After 12000 layoffs decision, Ratan Tata's TCS may freeze hiring of...

Tata Consultancy Services (TCS), India's largest IT firm, has become the talk of the town since it announced the decision to lay off 12,000 employees or 2 per cent of its workforce of 600,000 over the next year. Now, the Tata Group IT firm may freeze the hiring of experienced professionals and pause annual salary increases globally, said people aware of the development, ET reported.

Onboarding delays

Onboarding delays for those with experience who have been hired exceed 65 days, according to the people cited.

TCS benched employees

TCS has also introduced a stricter internal policy for benched employees, who are not currently assigned to client projects. Such employees now have 35 days to find a billable assignment or exit the company, the report said. Phasing out of such staff has already begun across cities including Hyderabad, Pune, Chennai and Kolkata.

Other companies may adopt TCS move

The layoff decision by TCS has added to the anxiety that’s gripping the IT sector, battling slowing demand and the threat of artificial intelligence (AI) culling jobs. Analysts said the TCS move may be adopted by other companies that are facing similar headwinds.

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“TCS' move to cut 2% of its workforce may lead to execution slippages in the near term and higher attrition in the longer-run for the firm and reflects a weak demand environment for the sector,” the report said. “With most deal wins being led by cost-optimisation initiatives and involving AI-led productivity pass-through, IT firms unable to gain share may have to resort to layoffs.”

TCS market cap

Since the announcement of 12,000 job cuts, TCS has lost over Rs 25,000 crore in its market cap, which currently stands at Rs 11.06 lakh crore, as of July 28. The shares of the IT firm closed at Rs 3,057 apiece on Tuesday.