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Economic Times
3 hours ago
- Business
- Economic Times
Retailers, restaurants in tech hubs fear festive slump amid TCS, IT layoffs
Bengaluru: Tata Consultancy Services' announcement of a mass layoff and the fear of more IT companies following the market leader with job cuts have left pubs, restaurants and retailers feeling unnerved ahead of the crucial festive season. They expect these developments to hurt consumer sentiment, especially in Bengaluru, Hyderabad, Pune and the National Capital Region where most IT professionals work and live. Some industry executives said there have already been signs of down trading in consumption by IT sector employees for the past few weeks, due to delayed salary hikes, poor business outlook in the sector and global job cut announcement by large tech companies. An executive at a leading alcobev retailer in Bengaluru said there has already been a 40% drop in large purchases compared with normal weekends in areas like Whitefield, which houses many IT companies including a large TCS are cutting down on visits to bars as well as reducing liquor consumption at home, he said, requesting not to be named. "However, in places like Indiranagar, which has a mix of non-IT professionals as well, there is no down trading," he mood is impacted where IT sector employees work or live, such as areas like Whitefield in East Bengaluru and HSR Layout in the south, said Chandu Reddy, director of Bengaluru-based cell-phone retail chain Sangeetha Mobiles. TCS on Sunday announced plans to lay off nearly 2% of its workforce, or more than 12,000 people, mostly in mid to senior grades, raising fear among employees across the IT sector who were already concerned about the impact of artificial intelligence on their jobs. TCS has also paused lateral hiring and salary hikes globally, ET reported Tuesday citing people in the know. Rival Wipro said earlier this month that it has yet to make a decision on employee salary hikes, and that any revision would depend on the demand industry fears most other IT companies to follow too, big tech companies have announced layoffs in the past 2-3 months. Microsoft is cutting 9,000 jobs, while Intel is laying off more than 5,000 in the US and Google is laying off hundreds of employees. Layoffs do affect sentiments if it becomes widespread, said Nilesh Gupta, director at electronics retail chain Vijay Sales. 'The IT sector layoffs are sentimentally negative. Consumers tend to reduce spending.' Harsha Vadlamudi, cofounder of LocaLoka Tequila and managing partner of Ironhill India, a chain of bars in Hyderabad and Bengaluru, said generally during such economic crises, there is a 10-15% reduction in the amount consumers spend and a reduction in the number of days they visit sector employees are usually one of the top spenders as most of them are young with high disposable income, said executives at the real estate industry. While the real estate industry is cautious, they are optimistic that the impact will be short-lived and professionals from other sectors will fill the gap in the 70% of demand now coming from non-IT sectors, residential absorption is expected to remain resilient with only minimal sentiment-led wait and watch or fluctuations, if any, said Sanjay Dutt, managing director and CEO, Tata Realty and Infrastructure. 'This is a good break for the real estate sector to take a stock of sentiments and market so that they don't repeat the past and end up building inventories,' he Sasalu, CEO at real estate developer Puravankara South, said while the IT sector is recalibrating, it's also evolving, and that evolution continues to support high-quality job creation across tech, AI, fintech and GCCs.'The homebuyer profile has matured, and we see sustained traction in strategic micro-markets,' he said. 'In fact, times like these often create opportunities—for investors, buyers, and developers alike—to focus on fundamentals and unlock real value.'As per researcher JLL, transactions in residential properties rose 7% on year to 69,530 in the April-June quarter, though demand in the first six months declined for the first time since the pandemic.
News18
8 hours ago
- Business
- News18
TCS Likely To Suspend Salary Hikes, Freeze Hiring Amid Cost-Cutting Drive: Report
The development comes close on the heels of Tata Consultancy Services' decision to lay off around 12,000 employees, a move that has sent ripples across the IT sector. Tata Consultancy Services (TCS) is likely to initiate a sweeping cost-cutting overhaul, freezing hiring of experienced professionals and suspending annual salary hikes worldwide, according to a report by The Economic Times. The development comes close on the heels of the company's decision to lay off around 12,000 employees, a move that has sent ripples across the IT sector. TCS has also tightened its internal policies for benched employees, staffers not currently assigned to any client project. These employees now have just 35 days to secure a billable assignment or exit the company, and the phased reduction of such staff is already underway in cities like Hyderabad, Pune, Chennai, and Kolkata. ET report said. These changes are part of a broader operational reset prompted by global macroeconomic uncertainty and subdued trade sentiment. An internal communication to employees cited the need to manage costs more aggressively to maintain competitiveness. A senior IT analyst quoted in the report estimated that the layoffs at mid- and senior levels alone could help TCS save $300-400 million annually, equivalent to around Rs 2,400-3,600 crore, providing a 100-150 basis point boost to operating margins. Despite the major shake-up, TCS CEO is reported to have assured that the layoffs will be implemented gradually, minimising immediate disruption. The restructuring has sparked concern across the Indian IT industry, with analysts calling it a warning signal of deeper structural changes. Brokerage firm Jefferies described the development as a 'canary in the coal mine" moment, suggesting that rising AI adoption and cost-focused contracts are prompting IT firms to do more with fewer people. The firm also warned that while the strategy might improve margins, it could lead to execution challenges and higher attrition in the long run. TCS stock performance reflects the pressure. It has fallen nearly 30% over the past year, making it one of the weakest performers in the Nifty IT index. On a year-to-date basis, the stock is down 25%, with nearly 12% lost in just the past month. As India's largest IT services company tightens its belt, the industry is bracing for further changes that may reshape hiring, compensation, and workforce strategy across the sector. TCS lost Rs 28,148.72 crore from its market valuation in two days after the company announced that it will lay off about 12,000 employees of its global workforce this year. Its mcap stands at nearly Rs 11,05,886.54 crore. The IT giant is set to lay off about 2 per cent, or 12,261 employees, of its global workforce this year, with the majority of those impacted belonging to middle and senior grades. As of June 30, 2025, the TCS workforce stood at 6,13,069. It increased its workforce by 5,000 in the recently concluded June quarter. The layoffs are part of the company's broader strategy to become a 'future-ready organisation", focusing on investments in technology, AI deployment, market expansion, and workforce realignment, TCS said in a statement. 'Towards this, a number of reskilling and redeployment initiatives have been underway. As part of this journey, we will also be releasing associates from the organisation whose deployment may not be feasible. This will impact about 2 per cent of our global workforce, primarily in the middle and the senior grades, over the course of the year," it said. tags : Tata Consultancy Services (TCS) tcs view comments Location : New Delhi, India, India First Published: July 30, 2025, 13:06 IST News business TCS Likely To Suspend Salary Hikes, Freeze Hiring Amid Cost-Cutting Drive: Report Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
Business Recorder
2 days ago
- Business
- Business Recorder
Indian shares dragged down by Kotak Mahindra Bank, TCS
MUMBAI: Indian shares fell on Monday as financials and IT declined due to weak results from Kotak Mahindra Bank and Tata Consultancy Services' layoff plans, respectively, and as uncertainty over trade talks with the US hit overall sentiment. The Nifty 50 fell 0.63% to 24,680.9 points, and the BSE Sensex lost 0.7% to 80,891.02. The broader small-caps and mid-caps lost 1.3% and 0.8%, respectively. Negotiations between India and the United States remained deadlocked over tariff cuts on agriculture and dairy products, dimming hopes of an interim deal ahead of US President Donald Trump's August 1 deadline. However, a framework trade agreement between the US and European Union eased fears of a bigger trade war between the two allies, which account for almost a third of global trade.
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Business Standard
2 days ago
- Business
- Business Standard
TCS' decision to lay off nearly 12,000 employees may lift margins
Tata Consultancy Services' (TCS') decision to lay off roughly 12,000 employees, primarily mid- to senior-level managers, is being viewed by analysts as a move to shore up profitability rather than a shift towards an AI-driven future. While the company cited evolving business needs and future readiness as reasons, industry experts say the action is a cost-cutting measure aimed at improving operating margins that have remained below the firm's aspirational range despite multiple efforts. The announcement on Sunday came as a surprise to many in the Indian information and technology (IT) sector, where involuntary layoffs have typically been handled quietly. Indian IT companies, as some of the country's largest organized-sector employers, have historically avoided large-scale public cuts. The sector employs around 6 million people, according to the data from Nasscom. TCS' operating margin has hovered between 24 per cent and 25 per cent for five consecutive quarters, below its stated aspiration of 26 per cent to 28 per cent. For the quarter ended June 30, operating margin stood at 24.5 per cent, down 20 basis points from a year earlier. The figure excludes wage hikes that TCS indefinitely deferred in April. 'I thought the demand was just coming back,' said a senior analyst at a global brokerage firm, speaking on condition of anonymity. 'This is a pure cost take-out strategy to lift margins, and once done, they may provide wage hikes to the remaining.' During a post-earnings call after Q1FY26 results, Chief Financial Officer Sameer Seksaria told analysts the company had been witnessing a discrepancy between demand and capacity. 'In this quarter as well, we have invested in capacity… That is what is reflecting in our margins,' he said. That 'excess capacity' largely refers to bloated mid-senior and senior layers of employees with experience between 9 years and 13 years, and 13 years and 17 years. According to staffing firm Xpheno, the top seven Indian IT firms employ about 492,000 professionals in those bands, compared with 486,000 at the junior end (from fresh graduates to five years of experience) — a group that draws significantly lower pay. A lot of those people were hired during the peak of the pandemic in FY21 and FY22, according to analysts. TCS hired 103,546 in FY22; the top five players cumulatively took in 273,377, the most in at least six years. Hiring has been going down ever since. Persistently weak and uncertain macroeconomic conditions may have prompted TCS to act this time. Revenue growth in constant currency terms had steadily declined — from 15.4 per cent in FY22 to just 4.2 per cent in FY25. 'Demand has been down and margins have missed expectations,' said Gaurav Vasu, founder of consultancy UnearthInsights. 'Also, many employees lack the client-relevant skills today. Roles like project managers, infrastructure support, and other support functions are now particularly vulnerable. There could be more slow, silent layoffs across the industry.' The financial impact of the layoffs on TCS' margins remains unclear. The company did not respond to a questionnaire sent by Business Standard on Sunday. TCS' challenges on both margins and top-line growth have weighed on its stock. Its share price has dropped nearly 30 per cent over the past year. In comparison, Infosys is down 19.3 per cent, HCL Technologies 10.3 per cent, Wipro 4.7 per cent, and Tech Mahindra about 6 per cent. Industry veterans, though, supported TCS' action. Ganesh Natarajan, executive chairman, of GTT Solutions said TCS is doing the right thing by taking proactive action. 'Because there is no doubt that companies who will succeed in IT and non-IT with AI will have to move beyond GenAI and ChatGPT to a much more fundamental game changing use of AI. This fundamentally means more use of agenticAI, autonomous agentic this context the traditional style of pyramid will disappear. This restructure and rethink is important,' he added. Earlier this month, TCS posted one of its weakest first-quarter results since 2020, with constant currency revenue shrinking 3.1 per cent and dollar revenue down 1.1 per cent. It was the worst constant currency performance among the top five Indian IT service providers in the quarter.
Hindustan Times
2 days ago
- Business
- Hindustan Times
‘Kitne aadmi the': Ex Tech Mahindra CEO calls TCS layoffs end of ‘Sholay era' in IT companies
Reacting to Tata Consultancy Services' (TCS) decision to lay off around 12,000 employees, Former Tech Mahindra CEO Chander Prakash Gurnani used an iconic dialogue from the Bollywood movie Sholay to hint at a major shift in how Indian IT firms operate. CP Gurnani claimed that the layoffs signal the end of evaluating IT companies on the size of their workforce.(Image courtesy: Tech Mahindra) The IT veteran spoke to CNBC-TV18, claiming that the layoffs signal the end of evaluating IT companies on the size of their workforce and a shift in focus to growth driven by artificial intelligence (AI). 'The focus on the Sholay dialogue 'Kitne aadmi the' or judging the Indian IT industry based on headcount, thank god that period will be over. All of us will have to rewire ourselves to start looking at output and outcome-based business models, outcome-based pricing, and look at what it does for business and customers, instead of looking at IT and systems in isolation," he said. 'I am actually quite excited because we, as in the Indian IT industry, have a chance to prove that we will build platforms and accelerate innovation, and we will rule the world focusing on the application cycle,' he added. However, the former CEO dismissed fears of AI causing job cuts and said that while some roles may be chopped, AI integration will soon create new types of jobs. 'If you see the job openings at these companies, they have only increased since the previous year. This is because they need more AI engineers, more data scientists, prompt engineers and people who can collapse a few functions of an organisation,' he added. Earlier, TCS confirmed that it would slash its workforce by about 2%, laying off 12,000 employees, throughout this year. Citing change in technology and client expectations, the company claimed that it was realigning its strategy. The move will affect mid-level and senior roles across the firm. Recently, overall hiring in India's IT industry has dipped. According to data quoted by the Economic Times, from April to June 2025, India's top six IT firms added only 3,847 employees, compared to 13,935 in the previous quarter.
