News Summary
- Tata Consultancy Services shed more than 23,400 jobs in the financial year ending March 2026, reducing its headcount from 607,979 to 584,519.
- Oracle is reportedly laying off an estimated 10,000 employees in India as part of a global workforce reduction tied to AI infrastructure spending.
- TeamLease Digital estimates roughly 40,000 layoffs across India’s tech ecosystem over the past year, including many mid-level managerial roles.
- India’s IT sector employs nearly 5.8 million people directly and generates approximately $315 billion in annual revenue, according to NASSCOM.
- A NITI Aayog report warned that AI-driven automation could displace up to two million jobs in India’s tech services sector by 2031.
- Former Reserve Bank of India Governor Raghuram Rajan has cautioned that AI will disrupt, but not derail, India’s services sector.
India’s technology services industry, which employs nearly 5.8 million people and contributes roughly $315 billion in annual revenue, is shedding jobs at an accelerating pace as artificial intelligence automates tasks that once required large teams of engineers and support staff. Tata Consultancy Services, the country’s largest IT employer, reduced its workforce by more than 23,400 people in the financial year ending March 2026, while Oracle is reportedly laying off an estimated 10,000 employees in India as part of a global restructuring.
The job losses extend beyond headline announcements. TeamLease Digital, a talent solutions firm that serves the IT industry, estimates that India’s technology ecosystem has seen close to 40,000 layoffs over the past year, including many mid-level managerial roles. The cuts span coding, testing, customer support, and project management positions that have long formed the backbone of India’s outsourcing model.
The contraction is structural rather than cyclical, according to Neeti Sharma, chief executive of TeamLease Digital. “Unlike previous cycles, this is a structural,not cyclical,correction driven by AI-led productivity compression, slower global discretionary tech spending, and a pivot away from legacy services,” Sharma told The Straits Times in April.
Global data underscores the scale of the shift. A report by TradingPlatforms found that more than 80,000 technology jobs were eliminated worldwide in the first quarter of 2026 alone, with nearly half of all layoffs linked to AI-related restructuring. The United States accounted for roughly 77 percent of those cuts, but India ranked second among affected countries with more than 2,000 reported layoffs during the period, according to the same analysis.
The Indian IT sector’s traditional business model is built on a straightforward value proposition: Indian developers cost a fraction of their American counterparts. That gap is narrowing as AI coding tools and autonomous agents handle tasks that previously required teams of junior programmers. “If a firm had 10 employees engaged in coding and development, they today need just one person with the knowledge of AI to handle all that work,” Ashish Singh, founder of recruitment firm HireMaven, told The Straits Times.
The warnings from industry veterans have grown sharper. Vinod Khosla, the Silicon Valley investor, told an AI summit in New Delhi earlier this year that India’s IT services industry will cease to exist in its current form by 2030. “By 2030, there will be no such thing as IT services,” Khosla said, according to Forbes. He added that firms must adapt their business models to survive the shift toward agentic AI and autonomous coding tools.
Despite the alarm, India’s macroeconomic data has yet to reflect a collapse. The country’s services exports reached a record $303 billion in the April-December 2025 period, and NASSCOM projects sector revenue of $315 billion for the financial year ending March 2026. Infosys reported relatively robust third-quarter results in January and maintained positive full-year guidance, even as its headcount declined by several thousand.
Former Reserve Bank of India Governor Raghuram Rajan has urged caution against doomsday predictions. In a February interview with Bloomberg Television, Rajan said AI will disrupt India’s services sector but will not derail it. “The Indian services story can still persist in many other areas outside of software, but yes, AI will be a challenge,” he said. “Things take time. The firms that are not technology-savvy will take more time. That is it.”
Rajan stressed that reskilling will be critical. India’s software firms and their employees will need to retool “really fast,” but “this is not something they cannot overcome,” he said. He also noted that multinationals continue to expand their global capability centers in India, shifting higher-value engineering and digital work to the country. A consultant in India still costs roughly one-fifth the price of a consultant in the West, giving domestic firms a pricing edge even as AI tools become ubiquitous.
The Indian government has begun responding to the transition. The Ministry of Electronics and Information Technology has trained an estimated 168,000 individuals in AI-related courses and is establishing labs in Tier 2 and Tier 3 cities to offer foundational training in AI and data-related fields. A NITI Aayog report published in October 2025 warned that AI-driven automation could displace up to two million jobs in India’s tech services sector by 2031, but added that strategic skilling could expand the sector’s workforce by roughly four million over the next five years.
Demand for AI-specific talent is already outpacing supply. A Deloitte report cited by The Straits Times projects that Indian AI talent demand will grow from roughly 600,000 to more than 1.25 million by 2027. The AI market itself is expected to grow at 25 to 35 percent annually, suggesting that the challenge is less about a net loss of jobs and more about a mismatch between existing skills and emerging roles.
Kashyap Kompella, founder of research firm RPA2AI Research, told The Straits Times that AI will not eliminate the need for developers. Instead, he said, “their value will shift from code creation to validation, testing, integration, security and production reliability. These are areas where human judgment, context and accountability remain critical.” The technology sector, in his view, is not eliminating human roles but reshaping the mix of skills required.
For the millions of Indian workers who entered the industry expecting stable, well-paying careers, the transition is already personal. A 39-year-old customer support worker for an American financial software firm, who spoke to The Straits Times on condition of anonymity, lost her contract in early 2026 as the company shifted investment toward AI. “If an engineer took two days to finish a task, the same thing can now be achieved by AI in less than 30 minutes,” she said. She has since enrolled in a 12-week online AI course from MIT Professional Education at a cost of roughly 200,000 rupees.
The question facing India’s IT sector is whether it can reskill its workforce quickly enough to outpace the automation of its core services. NASSCOM President Rajesh Nambiar acknowledged in February that campus hiring has fallen significantly from previous levels. For now, the industry that once dragged India’s economy into the global marketplace faces its most fundamental challenge in four decades: proving it can remain relevant as the technology it helped build begins to replace the workers who built it.