According to market analysts, TCS, the flagship company of the Tata Group, is going through its worst crisis since the 2008 recession, when its shares fell 55 per cent. TCS share prices are projected to fall by 25 per cent in 2025, and experts predict that if this decline continues, the current fiscal year could be the worst financial year in the company’s history.

Why are TCS shares falling?

According to analysts, the Indian stock market has witnessed turmoil in the last few months as foreign investors have been pulling out money from the market in large numbers amid US President Donald Trump’s tariff war against India and the recent announcement of imposing 50% import duty on Indian exports.

The IT industry, once considered a favourite of foreign institutional investors (FIIs), is now facing a downfall. Foreign investors have reduced their stake in TCS from 12.35% in June 2024 to 11.48% in June 2025, resulting in the company’s shares falling over 25 per cent in the current fiscal.

The Nifty IT index has fallen 25% so far this year, making it the worst-performing sector in the market as more than half of the Rs 95,600 crore pulled out of India by foreign institutional investors till July 2025 has come from IT stocks alone.

Why did mutual fund investments rise?

Meanwhile, domestic mutual funds have increased their stake in TCS from 4.25% to 5.13% and made fresh purchases worth Rs 400 crore in the company, according to the data. As per the data, trailing PE of TCS has declined from 41 times to 20 times, the five-year CAGR is 8.5%, while the stock CAGR is 6%.

Notably, India’s IT sector has grown at a compound annual rate of 12.5% over the last two decades, but has underperformed the Nifty in the last three to five years.

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Layoffs in TCS

According to recent media reports, TCS is considering cutting its global workforce by about 2 per cent, which will result in the job loss of over 12,000 TCS employees in the current financial year. The company’s decision is being investigated, with Jefferies warning that layoffs in TCS could result in a slowdown in implementations in the near term and a workforce increase in the long term.

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According to a Moneycontrol report, more than 2,000 TCS employees have recently received transfer notices. These employees have been asked to transfer to different places and have been given 2 weeks’ time for this. Travel and accommodation costs of employees will be covered. However, if they do not transfer as per the company’s order, “disciplinary action” will be taken against them.

The report said that TCS employees started receiving these transfer notices from the end of August.

Angered by the sudden orders, around 180 employees reached NITES and said the company was forcing them to shift without proper notice or consultation. This has caused “immense hardship for employees and their families”.

The IT union on behalf of the employees has now filed a formal complaint against TCS for “unethical transfer practices”. The complaint was lodged with the Ministry of Labor and Employment.

Recently, TCS office in Bengaluru received a fake bomb threat call. The caller was a former employee who had a grudge against the company and had reportedly made the call out of spite.

As soon as the call was made, the office staff panicked and the police were called. After this, the bomb disposal squad along with some police officers reached the spot and started investigation. The bomb disposal squad investigated the entire complex but did not find anything suspicious.

Upon further investigation, police learned that a former employee of a Hubli-based company was behind the calls. This was not the first bomb threat incident in the company. In May this year, TCS Hyderabad office had received a similar fake bomb threat call. A report in Livemint said that the call was made by a former employee based in Bengaluru. Reports have revealed that the person behind the call was part of the security team of TCS Hyderabad office, but was removed from the job.

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Both TCS and Tata Sons declined to comment on the news. However, an unnamed source has revealed that preliminary talks have taken place as the Tata boss needs reliable and experienced hands to manage the group’s diverse initiatives in technology verticals.

“Chandrasekaran has held discussions with Gopinathan for his engagement with the Tata group in an advisory role after the notice period expires on September 15. Preliminary discussions have taken place,” the source was quoted as saying.

On the other hand, the outgoing CEO of TCS has said that he has no immediate plans to join the Ratan Tata-led group in advisory roles. “As far as advisory roles are concerned, my respect for advisors is growing exponentially. So, I will see if anything comes out of it. But there are no plans as of now,” he was quoted as saying.

Chandrasekaran and Gopinathan have worked with each other for nearly 25 years. The Tata boss appreciates the contribution of the outgoing TCS boss in the growth of the IT giant. Under Gopinathan, the brand value of TCS has increased by 212 per cent to $45.5 billion in the last two years.

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The IT giant said, “The board has designated K Krithivasan as CEO-designate with effect from March 16, 2023. Krithivasan will undergo a transition with Rajesh Gopinathan to be appointed as the Managing Director and CEO in the next financial year.” ” a statement.

Who is K Krithivasan?

Krithivasan is currently the President and Global Head of the Banking, Financial Services and Insurance Business Group at TCS. Having joined the group in 1989, he has been a part of the global technology sector for over 34 years. During his long tenure at TCS, he has held various leadership roles in Distribution, Customer Relationship Management, Large Event Management and Sales.

Krithivasan is also a member of the Board of Directors of TCS Iberoamerica, TCS Ireland and the Supervisory Board of TCS Technology Solutions AG. He holds a bachelor’s degree in Mechanical Engineering from the University of Madras and a master’s degree in Industrial and Management Engineering from IIT Kanpur.

Speaking on Gopinathan’s exit, Tata Sons boss and TCS chairman N Chandrasekaran said: “I have had the pleasure of working with Rajesh for the last 25 years. During this period, Rajesh has always been successful in various roles, including his former Has distinguished himself with exemplary performance in the role as Chief Financial Officer.”

Over the past 6 years, Chandrasekaran said, Rajesh has provided strong leadership as MD & CEO and is at the forefront of TCS’s growth with significant investments in cloud, agile and automation to help customers accelerate their transformation. The foundation of the stage has been laid. “I deeply appreciate Rajesh’s immense contribution to TCS. I wish him all the best for the future,” he added.

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According to report, the entry-level employees at Wipro only received 70 per cent of the variable remuneration that senior personnel received. In the similar manner, Infosys followed suit and set a limit on total employee remuneration at 70 per cent of the previous level.

After Wipro and Infosys reduced variable compensation for its employees in the first quarter, TCS was offering 100% variable pay.

Milind Lakkar, the company’s chief human resources officer, made the announcement on Monday after the company’s quarterly results were made public. He said that in the second quarter of the current fiscal year, the company will pay all of the variables to 70% of its employees.

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Although the companies announced that employees would be asked to return to the office last September, Omicron’s rising cases and local lockdown impeded decisions.

Top IT companies like TCS, Wipro, Cognizant and Infosys want to do away with the provision of work from home and are asking employees to return to office, the report said.

Wipro has asked all managerial-level employees, both of whom have received dozens of vaccinations, to return to offices by March 3. Wipro, however, is going to start working two days a week from the office pattern. Meanwhile, the rest of the employees can continue to work from home.

Tech giant Cognizant is also planning to reopen the office. However, it will not be mandatory for the employees. Cognizant will ask employees to return to office on a voluntary basis from April. The newspaper reported that Cognizant is planning to reopen offices in a phased manner.

TCS will also allow its employees to work on a hybrid model, which means they can continue to work from home and sometimes stay in office premises. Similarly, Infosys will adopt a hybrid model for its employees in the next few months.

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The company’s revenue grew by 9.4 percent to Rs 43,705 crore as against 39,946 crore in the same period of the previous fiscal. The company’s constant currency growth came in at 4.2 percent quarter-on-quarter and 5.9 percent year-on-year.

Operating margins were 26.8 percent, 0.2 percent expansion and 1.7 percent year-over-year in the fourth quarter (Q4). The company said the board recommended a final dividend of 15 per equity share. The company said its net addition equaled 19,388 employees, the highest in a quarter.

For the quarter ended December 2020, TCS net profit stood at 8,701 crore quarter while revenue stood at 42,015 crore.

Revenue from its largest vertical i.e. Banking, Financial Services and Insurance (BFSI), stood at Rs.17,559 crore as against 15,207 crore annually. Its Q4 order book is worth 9.2 billion dollars.

Rajesh Gopinathan, Chief Executive Officer and Managing Director, said, “In our investment and research and innovation over the past decade in building new capabilities, we are well positioned for further multi-year technology services opportunity. When we are establishing our dominance in our traditional areas of strength, we are gaining a good share in the opportunities for growth and change. Going into FY22, our focus will be to engage with customers in our development agenda, which will be driven by innovation and leveraging collective knowledge. ”

V Ramakrishnan, Chief Financial Officer, said, “Our Q4 margins are a testament to our strong belief that it is possible to win mega-deals, industry-leading growth, continue to invest in our people and new capabilities.” Every investment we have been making over the years places us strongly to expand our footprint in the opportunity for big growth and change. “

Shares of the IT company fell 2.43 percent to close at 3,241.45 per share on the BSE on Monday.

(With agency inputs)

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