TCS layoff a business call, doesn't warrant state intervention: Karnataka IT minister
Speaking with Mint on the sidelines of the inauguration of the 2025 Bengaluru Tech Summit in here on Friday, Kharge said: 'As far as I'm aware, TCS (Tata Consultancy Services Ltd) overestimated their business and had a heavy bench strength, thus leading to a course correction. A very little part of it had to do with artificial intelligence (AI)," the state's minister said. "Now, be it AI or any other disruptive technology, the industry needs to ensure that their human resources remain on top of necessary skills. As the state government, we need to work with industries to ensure that the available talent becomes more employable.'
He said a government intervention will only be required if the state assesses that AI upskilling incentives are needed to ensure its technology workforce does not lose jobs.
Kharge's statement comes on the back of Karnataka labour minister Santosh Lad's statement on Wednesday that TCS' layoff decision was 'alarming' and that the state would 'look into the labour law' to see if there have been any violations by India's largest homegrown tech services firm.
On 27 July, TCS announced that it will 'release' 2% of its global workforce, or 12,000 employees, through the year. Chief executive K. Krithivasan said in an email to employees that the layoffs will primarily affect mid- to senior-level employees, whose deployment 'may not be feasible' due to the impact on business from new technologies, including the advent of AI in enterprises.
TCS, which houses over 600,000 employees around the world, counts Bengaluru as one of its largest hubs. However, the city, known colloquially as 'India's Silicon Valley', has recently come under pressure due to rising rental costs and congestion.
Notwithstanding these challenges, Kharge said the state does not expect to lose out on a boom in India's global capability centres (GCCs) from major foreign firms, such as financial services giant JPMorgan Chase, retail major Walmart, energy giant Shell, engineering group Bosch, and others. Each of these companies, to be sure, have GCCs in Karnataka.
'As part of our state industry policy, we do not offer subsidies and incentives to any party setting up offices and hubs in Bengaluru. We have 850 major GCCs, and about 1,500 overall GCCs taking small capability centres into account," the minister said. "Now, we have identified clusters around the Bengaluru area as part of our state economic policy, which include Manipal-Udupi-Mangaluru, Hubbali-Belagavi-Dharwad, Kalaburagi, Ballari, and Mysuru-Ramanagara.'
Kharge said the Karnataka government is helping companies with infrastructure in these regions and offering them incentives to set up a plug-and-play model in these cities. "For instance, a Fortune 500 company can experiment with the local talent pool in these cities by setting up a small office of 250 employees for a year, and then let us know what they additionally require,' he added.
The plug-and-play policy in question is applicable to small and medium enterprises (SMEs), startups, and manufacturing firms as well, in what Kharge said was a 'customized' incentive policy, based on demand.
There is, however, competition in the space from other states. Earlier this month, the Telangana chief minister's office said the state is close to introducing a 'custom GCC policy', akin to what Kharge described. Data from Telangana's government notes the presence of 355 GCCs as of June.
Industry advocacy body Nasscom had said in February that India's GCC industry, set to generate $110 billion in annual revenue by FY30, counts Telangana, Andhra Pradesh, Gujarat and Tamil Nadu as the top contenders to Karnataka's current leadership as India's technology hub.
Kharge said Karnataka was not perturbed by competition.
'My closest competitor is Telangana, which houses 210,000 IT services companies, compared with 450,000 that I host in Karnataka. Even in other sectors, I'm competing with Tamil Nadu to attract manufacturing firms, and with Maharashtra for sector-agnostic foreign direct investments. Nearly 65% of India's aerospace and defence industry is based in my state, and last year, GCCs leased 77.2 million sq ft of office space, 47% of which was in Bengaluru itself,' he added.
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