In a move that has sent ripples through the Indian IT corridors, Tata Consultancy Services (TCS) is leaning into the AI revolution with a “honesty-first” approach. Speaking at the Nasscom Technology and Leadership Forum in Mumbai, CEO K. Krithivasan told associates that if they find a way to do a task “faster, better, or cheaper” using AI, they must pass those gains to the customer—even if it results in lower revenue for TCS.
This radical transparency arrives at a sensitive moment for the company, following a nearly 20,000-person decline in headcount and a massive sell-off in IT stocks.
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The Revenue Gamble: Why TCS is “Cannibalizing” Itself
Traditionally, IT firms have thrived on high “billing hours.” AI disrupts this by completing tasks in minutes that previously took days.
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The Proactive Pivot: Rather than hiding these efficiency gains to protect margins, Krithivasan wants TCS to lead the change.
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Long-term Play: By telling clients how to pay less using AI, TCS hopes to secure long-term loyalty and capture new, more complex AI-native projects that will emerge as legacy work is automated.
The 20,000 Figure: Understanding the Headcount Decline
The sharp drop in employees has caused significant unease among the 600,000-strong workforce.
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The Data: Headcount dropped by 19,755 in the June-September quarter of FY26, bringing the total to 593,314.
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The Defense: CHRO Sudeep Kunnumal clarified that this is a combination of voluntary and involuntary attrition. Notably, voluntary attrition actually improved (dropped to 13.3%), suggesting that the decline is partially due to slowed hiring and re-skilling efforts rather than a single mass-termination event.
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Market Turmoil: The Worst Month in 23 Years for IT Stocks
Investors are currently spooked by the end of the traditional IT business model.
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Value Erosion: Indian IT firms lost $68.6 billion in market value in February 2026 alone.
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Nifty IT Crash: The index is down 21%, nearing its worst monthly performance since the early 2000s. The fear is that if AI does the work of ten people, the revenue for companies like TCS, Infosys, and Wipro will structurally shrink forever.
Reality Check
TCS is trying to “control the fire” by being the one to start it. Still, the transition from a volume-based model to an AI-value model is fraught with danger. Therefore, while Krithivasan says “we are not afraid,” the market’s 21% drop suggests that investors certainly are. In fact, if every employee successfully “cannibalizes” revenue as instructed, TCS will face several quarters of shrinking top-line growth before the “new opportunities” the CEO mentioned actually begin to pay off.
The Loopholes
The CEO urged staff to tell clients if AI makes work cheaper. In fact, this is a “Trust Loophole”—clients will eventually figure out that AI is doing the work anyway. Therefore, by being the first to reveal the truth, TCS prevents a future “billing scandal” where clients feel cheated. Still, the “Attrition Loophole”—where the 20,000-person drop is framed as “not a layoff”—is a way to manage public perception while the company quietly scales down its reliance on entry-level human labor.
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What This Means for You
If you are an IT professional at TCS or a peer firm, the “safe” era of manual coding and routine testing is over. First, realize that your value now depends on how well you can direct AI, not how fast you can type. Then, if you are looking for job security, focus on Client Strategy and Architecture, as these are the areas where human “honesty” and high-level decision-making cannot yet be automated.
Finally, understand that resisting AI is a career-ender. You should follow the CEO’s advice and “enjoy the benefits” of the tools to stay relevant. Before your next performance review, ensure you have a list of AI-driven efficiencies you’ve implemented, as “doing work faster” is the new benchmark for success at the Tata Group.
What’s Next
TCS is expected to announce a new AI-based pricing model by the next quarterly earnings call. Then, look for a shift in recruitment, with the company likely hiring fewer “generalist” engineers and more “AI specialists.” Finally, the Nifty IT index will likely remain volatile until the first set of “AI-cannibalized” financial results are released, showing exactly how much revenue is being lost to efficiency.
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