Nasscom warns of workforce rationalisation as legacy IT skills face reset amid TCS job cuts

National Association of Software and Service Companies (Nasscom) is expecting more workforce rationalisation in the IT industry over the next several months as traditional skillsets are getting re-evaluated. The tech industry body’s statement follows Tata Consultancy Services’ (TCS) announcement of cutting over 12,000 jobs in FY26.

Country’s largest software exporter TCS, which currently has an employee headcount of 6,13,000, is set to reduce about 2 percent of its global workforce in phases across FY26, impacting roughly 12,200 employees, chief executive and managing director K Krithivasan told Moneycontrol in an exclusive interview on July 27.

Krithivasan had cited increasing skill gap and lack of feasibility in redeployment of the mid and senior level employees amid changing technological contours and client demands as the reason for the layoffs.

In response, Nasscom said that the tech industry is at an inflection point, as AI and automation move to the very core of how businesses operate. To be sure, TCS is an active member of Nasscom.

“Over the next several months, we anticipate some transitions as organisations pivot toward product-aligned delivery models, driven by rising client expectations around agility, innovation, and speed. This shift is likely to reshape traditional service delivery frameworks and, in the near term, may lead to some workforce rationalisation as traditional skillsets are re-evaluated,” Nasscom said in a statement.

The industry body urged the tech industry, academia and the government to step up and collaborate in bridging this skilling divide, and including talent development as a national and business imperative central to sustaining India’s technology leadership in the AI era.

The government has already taken note of the issue. Moneycontrol had reported on July 28 that the ministry of electronics and information technology (MeitY) is keeping a close eye on the developments surrounding TCS.

The government, in the days to come, expects the industry and academia to address issues related to skilling and re-skilling.

“Hiring trends will continue to evolve, with increasing demand for deep, specialised expertise. There is no one-size-fits-all solution each enterprise will navigate this transition based on its unique strategic needs,” Nasscom said.

Indian technology industry is already taking significant steps in preparing its talent base for this shift. As of Q4FY25, over 1.5 million professionals have been trained in AI and GenAI skills across levels, Nasscom shared. The advanced AI skilling initiatives have reached more than 95,000 employees in leading listed firms, covering AI-native cloud, embedded AI, and applied intelligence certifications.

Source: GWFM Research & Study