TCS layoffs impact: Wipro, Infosys, 37 other IT stocks fall today

Shares of largecap IT names such as Wipro Ltd and Infosys Ltd fell up to 3 per cent in Monday's trade after the largest software exporter Tata Consultancy Services (TCS) said it was looking to cut 2 per cent jobs, laying off 12,000 of its global employees. The layoff decision came as discretionary spends did not improve and clients remained wary of trade tensions globally. The recent management commentaries from IT firms did not inspire confidence either and stock analysts were largely expecting a challanging environment for TCS in the next two quarters.

TCS said its move was not to because of chasing AI-driven efficiency, but because it can no longer reassign employees whose skills no longer fit its evolving business. The BSE IT index fell 0.57 per cent to 34,901.18.  A total of 37 index constituents declined; 17 were trading higher. Wipro fell 2.76 per cent to Rs 252.20 on BSE. TCS declined 1.26 per cent to Rs 3,094.90. Infosys slipped 0.90 per cent to 1,501.90. HCL Tech edged 0.33 per cent lower while Tech Mahindra was flat.

"The sharp cut in the IT index has been dragging the market down, and there is no respite in this in view of the 2 per cent cut in its global workforce announced by TCS. However, midcap IT names hold promise in view of their strong growth prospects," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

To recall TCS revenue degrew 3.3 per cent sequentially in Q1 in constant currency (CC) terms. International sales for Q1 fell 0.5 per cent in CC terms despite sluggish performance in FY24 & FY25. Equipment and Software cost decreased materially to 1.14 per cent of sales from 4.26 per cent QoQ, which implied services and other business grew just 0.1 per cent QoQ in CC terms.

Nuvama expects the demand environment to stay challenging for TCS in the next one–two quarters due to macro uncertainty. But the brokerage stayed positive on medium-to-long term TCS outlook as technology debt is very high for enterprises, which will warrant a revival in spending as macro improves.

"Growth for TCS remains elusive. That said, sequentially the headwind from the BSNL ramp-down is now manageable, and there is enough slack in the pyramid to drive margin gains through the year. Valuations are undemanding, and we reiterate our Buy rating on TCS with a target of Rs 3,850, implying a 14 per cent potential upside," MOFSL said post TCS' Q1 results.