Tata Consultancy Services’ (TCS’) decision to downsize its global workforce by 2 percent, around 12,200 jobs, has sparked a fresh wave of concern across India’s IT sector, as it faces AI-led reset, weak demand and tariff uncertainty.
Speaking exclusively to Moneycontrol, chief executive officer K Krithivasan described the move as one of the toughest decisions he has had to take, calling it a “necessary step to build a stronger, future-ready company”.
Employees across the sector are anxious, as artificial intelligence (AI) and skill gaps threaten to disrupt the industry globally. Since early this year, the tech industry has seen large-scale layoffs, with major players cutting thousands of jobs as part of restructuring exercises. Contributing factors include slowing revenue growth, macroeconomic uncertainties and rising automation, as companies boost AI capabilities.
During such periods of economic uncertainty, financial planning becomes critical. Here’s how to manage your money effectively after a job loss:
Emergency corpus: your lifeline in uncertain times
Building an emergency fund is the first step and a core aspect of financial planning. You should look to maintain savings equal to six–12 months of household expenses and EMIs in liquid instruments such as savings accounts, short-term fixed deposits or liquid funds.
If no dedicated emergency fund is in place, you can consider getting rid of low-yielding assets such as insurance policies or underperforming mutual funds that are not adding value to your portfolio to generate liquidity. Physical assets like unused gold or silver can also be liquidated to create a contingency fund. This safety net can help meet essential expenses during periods without income.
Life, health insurance a must
Preparing for emergencies also includes having sufficient term and health insurance covers. If you have been relying solely on your employer-sponsored health insurance covers for yourself and your parents, buy personal policies at the earliest. Your group health insurance cover will cease to exist the moment your employment contract ends.
Stick to your budget, spending discipline
Cutting discretionary spending is critical during no or low-income phases. Expenses such as dining out, OTT subscriptions and gym memberships should be paused. Consider delaying big-ticket purchases or even non-essential home appliances and gadgets.
Your household budget should prioritise unavoidable spends— school fees, utility bills, insurance premiums, credit card dues and EMI payments. Regularly tracking expenses and adjusting them in real-time can help cushion the impact of income loss.
Families may need to revisit their monthly budget collectively to ensure everyone contributes or adjusts expectations to suit the revised financial situation.
Setting aside a part of funds for reskilling or training can also aid your transition into a new job role or industry, should the need arise.
Avoid card spends, use emergency kitty to pay EMIs
Loan EMIs and credit card dues must continue to be paid even during job loss. A default can lead to penalties, higher interest costs and damage to credit scores. If necessary, emergency savings should be used to keep up with repayments in the short term.
If you’re still struggling to find a job, consider alternatives like requesting a loan moratorium from your bank or extending your loan tenure. Keep in mind that opting for a loan moratorium or extending the tenure can significantly increase your interest costs over time. Once employed again, make loan pre-payments to reduce your debt. Avoid using credit cards for big spends unless absolutely unavoidable.
Re-evaluate financial goals
While long-term goals like retirement or children’s education should remain on track, you should reassess short-term goals should the period without income extend beyond six months.
Depending on whether or not you can take on short-term freelance opportunities in the interim, you can take a relook at your systematic investment plans (SIPs) and pause them until cashflows are back on track.
Dip into retirement corpus as last resort
Leave your retirement savings in equity funds, National Pension System (NPS) and public provident fund (PPF) untouched as far as possible. Do not liquidate these funds partially or fully to meet routine household or lifestyle expenses. These funds are intended for long-term security and should only be tapped in case of unavoidable emergencies like health-related expenses or to prevent loan defaults.