TCS Under Fire: Labour Department Summons Tech Giant Over Forced Layoffs

The Indian IT behemoth, Tata Consultancy Services (TCS), is facing escalating scrutiny over its recent workforce reduction plans, culminating in a summons from the Karnataka Labour Department for a conciliation meeting on August 6.[1][2] The meeting follows a formal complaint filed by the Karnataka State IT/ITeS Employees Union (KITU), which has accused the company of orchestrating mass layoffs under the guise of forced resignations, a move the union contends is in direct violation of the Industrial Disputes Act.[1][3] This development has intensified the debate surrounding employment practices within India's tech sector, a cornerstone of the nation's economy, and has drawn the attention of the national government.[1][4] The controversy erupted after TCS announced plans to shed approximately 2% of its global workforce, which translates to over 12,000 employees, primarily at the mid and senior levels.[5][6] This move, one of the most significant workforce restructurings in the company's history, has sent shockwaves through the industry and mobilized employee unions who are now challenging the legality and ethics of the company's actions.[7][6]

At the heart of the dispute are allegations that TCS is compelling employees to resign involuntarily.[8] Unions like KITU and the Nascent Information Technology Employees Senate (NITES) have been vocal in their condemnation, labeling the practice as illegal and inhumane.[9][4] According to the unions, the Industrial Disputes Act stipulates that any company employing more than 100 workers must secure prior government approval before undertaking mass retrenchment, a step they claim TCS has failed to take.[9][10] KITU has stated that forcing an employee to resign is a punishable offense and that every employee has the legal right to refuse.[9] The union claims to have received numerous complaints from TCS employees, with some sources alleging that hundreds of staff in the Bengaluru office were coerced into resigning within a two-week period.[8][10] The alleged tactics include pressuring employees on the "bench" – those who are between projects but still on the payroll – to quit, with threats of termination without proper documentation, denial of severance, and even blacklisting.[8][9] This pressure has been exacerbated by a new internal "bench policy" that reportedly limits an employee's time without a project to just 35 days a year, effectively shifting the burden of finding new assignments onto the individual worker.[9][10]

In response to the growing outcry, multiple IT employee unions have mobilized to support the affected workers. KITU, NITES, and the Forum for IT Employees (FITE) have set up helpdesks and are advising employees against resigning under duress.[9][11] They have also taken formal action, with KITU lodging an industrial dispute case with the Karnataka Labour Department.[1][3] NITES has escalated the matter to the national level, filing a formal complaint with the Union Ministry of Labour and Employment against what it calls "illegal" layoffs and a "systemic pattern of forced exits, delayed onboarding, and unlawful retrenchments."[4][12][13] This is the third complaint NITES has filed against TCS in a short period, following previous grievances regarding the bench policy and delays in onboarding over 600 lateral hires.[12][14] The unions are demanding immediate government intervention to halt the terminations, reinstate the affected employees, and hold TCS management accountable for what they see as clear violations of Indian labor laws.[12][15] The Chief Labour Commissioner has also summoned senior TCS executives to a meeting on August 1 to discuss the mass layoffs and onboarding delays.[1][16]

TCS has publicly addressed the workforce reduction, positioning it as a strategic move towards becoming a "Future-Ready organisation."[5] The company states the layoffs are part of a broader strategy that includes investing in new technologies like AI, entering new markets, and realigning its workforce model.[5][17] CEO K Krithivasan has clarified that the layoffs are not a direct result of AI-driven productivity gains but are intended to address skill mismatches for future needs.[6][18][17] He acknowledged it was a "tough decision" but necessary to build a stronger TCS.[18] The company insists that employees whose roles are no longer feasible will be released, and this will primarily affect those at middle and senior levels.[5][18] In response to the backlash, TCS has assured that it will provide support to departing employees, including full notice period payments, severance packages, extended insurance benefits, and outplacement assistance.[19][6][20] However, these assurances have done little to quell the anger of employee unions, who argue that such benefits do not excuse the alleged illegality of the process.[11][13]

The conflict between TCS and the employee unions highlights a critical juncture for the Indian IT industry. As companies navigate global economic uncertainties and the transformative impact of artificial intelligence, workforce restructuring is becoming more common.[7][21] TCS itself has stated that the layoffs are part of its effort to adapt to these changes and remain competitive.[21] Analysts suggest that the increasing adoption of AI and cost-focused client contracts are pushing IT firms to operate more efficiently, potentially with a smaller workforce.[21] While TCS's CEO has denied that AI is the direct cause of the current layoffs, the company has openly stated its strategy involves deploying AI at scale.[11][22][17] This situation at TCS could set a dangerous precedent for the entire sector, potentially normalizing job insecurity and eroding employee rights if large corporations are perceived to be able to bypass established labor laws.[4] The outcome of the conciliation meeting on August 6 and the ongoing interventions by labor authorities will be closely watched, as they will have significant implications not only for the thousands of affected TCS employees but for the future of labor relations and job security in India's burgeoning AI-driven economy.