Mishra said employees who are laid off can still approach smaller and medium-sized IT services companies and product development companies for work.
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FRANCIS MASCARENHAS
Downsizing of workforce in the Indian IT sector has been a long time coming as per experts businessline spoke to, following the announcement by Tata Consultancy Services to reduce employee stength by 2 per cent. According to some HR professionals, the distress of layoffs has been there for the last four quarters or so and will continue for a couple of more quarters. However, they also maintained that this does not mean mass unemployment for the sector.
Aside from TCS, and Infosys in February, HCL Technologies in its last quarter said that it won’t redeploy some employees due to automation, calling it a “change in the industry.” This is one of the reasons why the company revised its EBIT margin guidance from 18-19 per cent to 17-18 per cent this year, said an industry analyst.
He attributed the layoffs to over-hiring during 2020 when Covid-19 hit the world. The analyst pointed out that in FY20-21, companies hired more people and later realised there was no corresponding growth or demand.
“The demand played out in FY22-23, but then fizzled out in FY24-25. So, you already have a lot of strength available on your bench and at this moment there is no visibility on their deployment in projects,” said the analyst, adding that there may be a net decline of employees in FY25-26 owing to muted demand in the sector.
According to UnearthInsight, Indian IT firms undertook strategic acquisitions valued at approximately $1.8 to $2.2 billion between FY22 and FY25—underscoring a relatively measured approach when compared to global peers. In contrast, companies such as Accenture, Capgemini, Genpact, and IBM each invested over $15–20 billion in mergers and acquisitions, reflecting a far more aggressive growth strategy. While Indian players like Infosys, Tech Mahindra, and HCL have focused on acquiring niche capabilities in areas such as digital experience, embedded systems, and data engineering, the overall scale and momentum of their M&A activity remain significantly lower than the global benchmark.
TCS generated operating cash flow of ₹48,908 crore in FY25 and is paying out ₹45,588 crore to its shareholders through dividends.
Job loss
Hiring has shifted to only specialised skills, like AI and cloud and analytics rather than Java and .NET, said Aditya Mishra, Managing Director and CEO of CIEL HR. He noted that hiring for software development, testing, business analysis, project management has come down, primarily due to technological advancement.
“One major change is in the role of project managers in IT services companies. Typically project managers were responsible for delegation of tasks, monitoring, course corrections. That has now become predictable and repetitive. Companies have to optimize their cost so they are letting go of resources where they cannot upskill further,” said Mishra.
Road ahead
Mishra said employees who are laid off can still approach smaller and medium-sized IT services companies and product development companies for work.
“They can be advisors, they can get into IT consulting. A lot of non-IT companies, are going for automation. Employees will have exposure, international exposure challenges that the western world has faced. That knowledge will be valued in diversified industry segments,” he said.
Raghav Gupta, Founder at Futurense, suggested employees to move into product startups or global capability centers (GCCs), where the hiring is more targeted. The second path is reskilling. Many are upskilling in areas like DevOps, data engineering, cybersecurity, or GenAI tools. There’s also a shift toward contract work and short-term projects.
Dismissing the skillset argument, the Nascent Information Technology Employees Senate (NITES) said employees would not be hired if they did not have the required skills. According to Harpeet Singh Saluja, President of NITES “skillsets,” “AI” and “macroeconomic developments” are common reasonings given by companies during layoffs. He also pointed out that the company’s layoff decision comes right after its earlier promise to hire around 40,000 freshers.
“This is technically the layoff season. A lot of employees reshuffle employees because they’re not happy with their appraisal. Every first 2 quarters this happens cyclically with one company after another. But this 2 per cent is a mass layoff. There’s no good reason either. If cost optimisation is the reason then why did the managerial level personnel get around 4 per cent hike this year? Why do only mid-level employees get laid off?” asked Saluja.
The NITES had earlier filed a complaint against TCS to the Labour Ministry as well. Taking cognisance of their complaint the Labour Commission will now meet with the union and company officials on August 1. Saluja complained that IT employees struggle to flag such issues since labour laws are in the concurrent list, meaning that the union will have to lodge complaints in every state to flag the issue.
Published on July 28, 2025