The Indian IT sector is reflecting growing pressure on itself ever since the massive layoffs were announced, owing to the faster and deeper integration of AI and the worsening economic scenario with the US. Tata Consultancy Services (TCS) announced layoffs impacting 2 percent of its global workforce, equating to around 12,000 jobs, mostly at mid and senior levels – signalling a growing strain on India’s IT sector.
Although TCS describes the layoffs as part of a strategic shift toward building a “future-ready generation” through upskilling and redeployment, it reflects a broader cost-cutting trend amid weakening demand and project delays from clients. The uncertainties surrounding the US tariffs and delayed interest rate cuts by the Federal Reserve have major roles to play here.
AI reshaping job opportunities
The rise of AI is drastically reshaping the Indian IT landscape. Previously, manual tasks, like coding, data analysis, and customer support, are now being automated with AI tools, thus leading to a revaluation of workforce needs. The roles involving repetitive functions are more vulnerable and companies are urging employees to upskill and be more creative. Other big IT firms like HCL and Wipro are also adjusting their workforce strategies, with HCL reducing talent deployment in specific segments and Wipro incurring restructuring costs in Europe.
Geopolitical situations have a major role too
Analysts now caution that hiring is becoming more cautious, with companies focusing on utilising existing staff and enhancing their capabilities in AI rather than expanding headcount. The outlook for Indian IT earnings remains muted for the rest of 2025 due to geopolitical and macroeconomic uncertainties, particularly in the US. However, industry experts anticipate a possible recovery in 2026 as tariff clarity improves and the US Federal Reserve potentially eases rates.
This development, that priortises AI over humans, highlights a structural transformation in India’s IT sector, with several CEOs suggesting that the industry is transitioning from a model of mass entry-level hiring to one emphasising specialist skills and innovation. While it puts pressure on job hunters, it also urges firms to invest in skill development and industry-academia collaboration to keep their human workforce up-to-date with the evolving technology.
