Corporate India, like its counterparts across the world, rediscovered the blunt instrument of layoffs in 2025 too. As growth slowed in some sectors and margins came under pressure, companies reached for the fastest lever available—payroll reduction. In homegrown technology startups alone, an estimated 9,500 people lost their jobs during the year, marginally higher than in 2024.
Tata Consultancy Services, India’s largest IT services firm, announced layoffs affecting about 12,000 employees—roughly 2% of its global workforce—as it sought to adjust to shifting skill requirements and artificial intelligence (AI)-driven business models. Multinational centres were not spared either. At Avaya’s India global capability centre (GCC), over 30% of staff were laid off amid intense competition in contact-centre services. Beyond headline announcements, “silent layoffs” and restructurings across sectors are estimated to have put nearly 50,000 roles at risk as automation and AI-reshaped work.
Invisible Toll of ‘Silent Layoffs’
Labelled as “rightsizing”, “efficiency drives” or “cost rationalisation”, such moves are often defended as prudent management. But layoffs undertaken without a clear strategic rationale tend to destroy more value than they preserve. Cost-cutting, by itself, is not a business model. In the short term, the arithmetic looks compelling. Wage bills fall, margins improve and analysts applaud discipline. Yet these numbers hide deeper, longer-lasting costs that rarely show up in quarterly earnings.
Abrupt or poorly explained layoffs erode employee trust, weaken organisational culture and drain productivity among those who remain. The hidden cost of fear can far outweigh the visible savings from headcount reduction. Layoffs also send powerful signals to the market. Investors may initially reward decisiveness, but repeated or poorly timed cuts raise uncomfortable questions about leadership judgment. India’s corporate context adds another layer of complexity. Formal-sector employment remains scarce, and large companies play an outsized role in shaping labour-market norms. Abrupt, opaque, or legally contentious layoffs invite regulatory scrutiny and reputational damage.
None of this is to argue that layoffs are never necessary. Businesses must adapt to structural shifts, technological disruption and changing demand. But there is a critical difference between strategic workforce restructuring and indiscriminate cost-cutting. The former is anchored in a clear view of the future business—what capabilities are needed, which roles are becoming redundant, and how remaining employees will be redeployed, reskilled or supported.
Strategic Restructuring
The latter is driven by near-term pressure and offers no credible path to renewed growth. Some companies have shown that adjustment without mass layoffs is possible. Infosys, for instance, responded to the slowdown by delaying campus onboarding, stepping up reskilling and redeploying talent towards higher-value digital projects. Headcount growth slowed, margins were protected, and reputational damage was avoided. The message to employees and investors alike was clear: this was adjustment, not retreat.
A strategic approach to workforce management is harder than across-the-board cuts. It requires investment in reskilling, redesigning roles, improving productivity through technology and aligning incentives with long-term goals. It also demands honest communication. Employees are more likely to accept difficult decisions when they understand the rationale and see a plan beyond mere survival. Boards have a crucial role here as too often, cost-cutting programmes are approved as financial exercises rather than strategic ones. Companies do not shrink their way to greatness. Sustainable competitiveness comes from clarity of purpose, intelligent capital allocation and a workforce aligned with strategy. Layoffs may sometimes be unavoidable. But when they become the default response to uncertainty, they signal not toughness—but a failure of imagination.