India's IT Sector Layoffs: Middle Layer Faces the Axe Amid Cost-Cutting Drive

India's IT sector is undergoing a layoff drill, with over 7,700 senior professionals with 15+ years of experience exiting top firms like TCS, Infosys, and Wipro. The costly middle layer is facing pressure due to slowing growth and the rise of AI, with TCS planning to cut 12,000 mid- and senior-level roles.

India's IT sector is experiencing a wave of layoffs, with over 7,700 senior professionals with 15+ years of experience exiting top firms like TCS, Infosys, and Wipro. This trend is driven by slowing growth and the rise of artificial intelligence (AI), which is transforming the industry's landscape.

The largest layoff announcement came from Tata Consultancy Services (TCS), India's largest IT company, which announced plans to cut 12,000 mid- and senior-level roles. TCS CEO K Krithivasan attributed the job cuts to "skill mismatch" and "organisational shifts" from waterfall to agile methodologies [1]. However, industry experts suggest that these layoffs are likely related to the increasing impact of AI on the IT sector [1].

The layoffs are part of a broader trend in the IT outsourcing industry, valued at $283 billion, where AI is being utilized across various domains such as basic coding, manual testing, and customer support [2]. The sector, which has historically absorbed a majority of India's engineers, is now facing the reality that rising AI use will demand newer skills that many current employees lack [2].

Microsoft, in contrast, has been more transparent about the influence of AI on its restructuring efforts. The company is openly framing its layoffs as part of a larger push into AI technologies, sending a clear message to Wall Street that it is committed to rapid AI adoption, even if it results in job losses [1].

The contrasting approaches of TCS and Microsoft highlight the complex relationship between AI advancements and employment in the tech sector. While AI capabilities are expanding, certain roles may become redundant, leading to job losses in traditional IT functions. At the same time, the industry may see a shift towards roles that require skills in AI development, implementation, and management [1].

The potential restructuring of the IT sector could have significant implications for India's economy and its growing middle class. The sector employed 5.67 million people as of March 2025 and accounted for over 7% of India's GDP [2]. The sector's huge multiplier effect, which includes direct and indirect jobs and consumer spending, is at risk due to the AI-driven changes.

As AI continues to evolve and reshape the IT landscape, companies worldwide will need to navigate the delicate balance between technological advancement and workforce management. The ongoing debate about how to communicate and implement these changes in different cultural and economic contexts underscores the need for strategic planning and adaptation.

References:
[1] https://theoutpost.ai/news-story/tcs-layoffs-signal-ai-s-impact-on-indian-it-sector-contrasting-with-microsoft-s-approach-18860/
[2] https://www.business-standard.com/companies/news/tcs-layoffs-signal-ai-driven-transformation-in-283-bn-outsourcing-sector-125080800567_1.html