Recent layoff announcements, such as Tata Consultancy Services’ decision to let go of approximately 12,000 employees in the current financial year, are being viewed by industry veterans not as a sign of impending crisis, but as a normal recalibration in response to changing market dynamics.
Mohandas Pai, Former Head of HR at Infosys and Chairman of Aarin Capital, emphasised that the current layoffs are a “normal event” linked to a slowdown in global growth. He explained that when hiring at the entry-level moderates, the organisational pyramid can become flatter, leading to an excess of middle and senior-level personnel.
“The CEO of TCS has said it has nothing to do with AI or other things; it has to do with the fact that they have too many people in the middle and senior level, and they do not see them being useful because people at the bottom are coming up to those positions,” Pai stated. He underscored that such “right-sizing” is a recurring phenomenon during periods of slower growth.
These Indian IT layoffs are largely in line with broader global tech sector trends. While global job losses in tech have garnered significant attention, Pai urged a look at the larger picture.
“I don’t think we should read too much into it because you don’t look at the denominator; you’re only looking at the numerator, not the denominator,” he remarked, pointing out that the number of layoffs, while significant in isolation, represents a small fraction of the millions employed in the global and Indian IT industries. For instance, TCS’s announced layoffs account for roughly 2% of its total workforce, a figure that pales in comparison to its annual attrition rate of 12-13%.
R Chandrashekhar, Former President of NASSCOM, highlighted that different segments of the IT industry are experiencing varied growth patterns. While IT services and Business Process Management (BPM) segments are adapting to technological advancements and client cost pressures, the Global Capability Centers (GCCs) and Indian startup ecosystems continue to show robust growth.
He acknowledged AI’s significant impact across industries but clarified that it is not the immediate cause of the current layoffs at TCS. Instead, client businesses are increasingly expecting IT companies to “deliver a lot more with less,” translating into cost pressures that necessitate internal adaptations.
Looking ahead, both experts stressed that future IT jobs will demand a much more diverse and advanced skill set. Pure “vanilla tech skills” will no longer suffice.
As client businesses increasingly adopt AI, the need will shift towards professionals who can bridge technology with business outcomes, helping clients understand the return on investment and efficiency gains from AI integration. This necessitates a proactive approach to upskilling and reskilling, enabling employees to become true “tech partners” capable of navigating complex business challenges with AI-driven solutions.
The onus is now on both employers and employees to address this evolving skill gap to remain competitive and relevant in the transforming IT landscape.
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