Tata Consultancy Services (TCS), India’s IT giant and the world’s largest IT services firm, announced its financial results for the July-September quarter of 2025 with a modest profit recovery amid a major workforce shake-up and strategic moves in AI technology. Despite facing controversy and criticism for a massive reduction in its employee base, TCS outlined bold plans for future growth that might reshape the Indian IT landscape significantly.
TCS Quarterly Financial Performance
TCS reported a consolidated net profit of ₹12,075 crore for Q2, marking a 1.4% rise year-on-year. Revenue from operations also grew by 2.4% to ₹65,799 crore, beating analyst expectations. However, sequentially, profits declined 5.3% due largely to severance payments amounting to ₹1,135 crore. This dip reflects the financial impact of large-scale workforce reductions the company implemented in recent months .
The Largest Workforce Reduction in Recent History
TCS's headcount plunged from 613,069 employees in the previous quarter to 593,314, a net decline of 19,755 — the steepest quarterly drop the company has seen in recent memory. This exceeded the company’s own earlier announcement of laying off about 12,000 employees (roughly 2% of its global workforce).
Chief Human Resources Officer Sudeep Kunnumal disclosed that about 1% of the workforce, mainly mid and senior-level employees, were let go due to skill mismatches. Nonetheless, worker unions, notably the National IT Employees’ Senate (NITES), disputed this data, suggesting the layoffs were far more extensive and management-driven, rather than voluntary, as voluntary attrition rates fell to 13.3%. The union claims nearly 8,000 more employees than officially reported have vanished from company rolls, spotlighting concerns over workforce management transparency .
Strategic AI Investments and Acquisitions
In the face of workforce challenges, TCS accelerated its push into artificial intelligence technology. The company announced plans to create a dedicated subsidiary to establish a 1 GW capacity AI data center in India within five to seven years, requiring a massive investment exceeding $6.5 billion. This ambitious project aims to position India at the forefront of AI infrastructure development and drive digital transformation across sectors.
Adding to its AI credentials, TCS acquired US-based ListEngage for $72.8 million. ListEngage, a Salesforce Summit partner in Massachusetts, specializes in Salesforce marketing cloud and AI advisory services and brings over 100 professionals with 400+ Salesforce certifications to TCS. This strategic acquisition strengthens TCS’s Enterprise Solutions unit, underscoring its commitment to becoming the world’s largest AI-led technology services company .
Dividend Announcement
Amidst these developments, TCS declared a second interim dividend of ₹11 per share. The record date is October 15, with payment scheduled for November 4, indicating confidence in sustaining returns for shareholders despite recent operational disruptions .
Implications and Consequences
The dramatic layoffs at TCS mark a significant shift in India’s IT services sector, signaling increasing automation, skill upgrades, and changing workforce dynamics. While TCS claims to be focusing on releasing employees whose skills do not match future needs, workforce unions suggest a broader management-driven rationalization that could impact employee morale and reputation.
Economically, the severance costs and headcount reduction will impact short-term financials but should align the workforce better with emerging technology demands. The large $6.5 billion AI data center investment highlights TCS’s strategy to lead in the AI era and build a robust digital infrastructure, potentially propelling India as a global AI hub.
The ListEngage acquisition complements these AI ambitions, expanding TCS’s Salesforce consulting and marketing cloud services—critical growth areas as businesses worldwide increase AI integration in customer engagement.
Overall, TCS’s actions reflect the evolving realities of the IT sector: a tough balance of workforce transformation, technological investment, and shareholder returns that will likely influence industry trends, employee relations, and India’s tech ecosystem over the coming years.