In a significant departure from its traditional employment model, Tata Consultancy Services (TCS), India's largest IT services firm, is exploring gig-based hiring arrangements for highly specialized roles that are difficult to retain. This move signals a strategic shift for the $283 billion Indian offshoring industry, which is grappling with a severe talent shortage and the disruptive wave of artificial intelligence.
The Drive for Flexible Talent Models
A senior TCS executive, who spoke on condition of anonymity as the plans are not yet public, revealed that the company is considering allowing professionals like data architects and data scientists to work for fewer hours, with the freedom to take up assignments elsewhere. The rationale is that such specialized work often does not require a standard eight-hour day.
"For instance, data architects do not need to work for 8 hours; their work often gets done in four hours, and then why should they not be allowed to work somewhere else?" the executive stated. "We will look at these sorts of gig options for skilled employees, and that will be the future of the workplace." The final structure of this initiative is still being developed, with critical considerations around client data privacy and confidentiality.
Context: Margin Pressure and AI Investment
This potential policy change comes at a crucial time for TCS. The company, which reported an operating margin of 24.3% last year, is facing profitability pressures. It has committed to a massive $6.5 billion investment over six years to build data centres exceeding 1 gigawatt capacity, an expenditure that will impact margins.
Financially, TCS closed fiscal 2024-25 with revenues of $30.18 billion, marking a 3.8% annual growth. However, it anticipates a revenue decline in the current 2025-26 financial year, attributed to the loss of key clients and the completion of a major 4G network deployment contract with state-run Bharat Sanchar Nigam Ltd (BSNL). In a restructuring move earlier in July, TCS laid off 12,200 employees (2% of its workforce) from middle and senior levels to re-skill for the AI transition.
Adopting a gig model could offer cost savings on employee benefits, gratuity, and salaries for bench staff not actively deployed on projects.
Expert Analysis: A Targeted Experiment, Not a Revolution
Industry experts view TCS's plan as a calculated experiment rather than a wholesale overhaul. Phil Fersht, CEO of HFS Research, noted that the move is "a targeted experiment aimed at retaining scarce talent while adapting to AI-driven productivity shifts." He emphasized that its success or failure will hinge on governance and client trust, not talent demand. "This is less about moonlighting and more about rethinking how productivity, time, and outcomes are aligned in an AI era," Fersht added.
This is a notable evolution from the pandemic era when TCS and other Indian IT firms criticized "moonlighting" as an ethical breach. The new approach is driven by efficiency needs and better talent utilization, especially given the large legacy workforce at major firms.
Kshitij Saraf, equities associate at Tusk Investments, explained that such flexible deployments are likely to be restricted to large-cap companies like TCS and limited to non-customer-facing roles like architects, domain experts, and AI specialists due to privacy risks. "Mid-tier IT services companies and engineering research firms... might not do something like this because such a move exposes their inner workings to competitors," Saraf said.
If mid-sized firms adopt similar models, it would likely be confined to back-end teams handling routine tasks, experts concluded.
