Indian IT sector hit by ‘silent layoffs’: 50,000 people may lose jobs this year; what’s driving the widespread firings?
The Indian IT sector has been hit by a wave of what experts are calling ‘silent layoffs’! These firings may lead to as many as 50,000 people losing their jobs in the IT sector by year-end.Whilst precise dismissal figures remain unclear, projections indicate about 25,000 job losses between 2023 and 2024, with expectations of this figure doubling in the current year, according to an ET report.Industry experts indicate that current market conditions warrant caution, as companies’ business growth and increased AI technology implementation, which handles routine engineering tasks, are compelling software firms to reduce their surplus workforce.
IT sector ‘silent layoffs’ in staggering numbers
Although TCS garnered significant attention for its July announcement to reduce 2% of its staff (approximately 12,000 from 600,000) by March 2026, several large and mid-sized technology services firms have been discreetly requesting employees to submit resignations or seek alternative employment. “I was called by the HR one day and informed that I was not required anymore,” an IT professional with three years of experience who was fired told ET. “HR said it would be my last working day and I can leave immediately. I was shocked and did not know how to react. They said it’s related to my performance and gave me a severance of three months’ salary.”Some organisations are implementing these reductions in a more subtle manner.“A few months ago, my manager told me that I am on a list of people who are being asked to go and I have three months grace period to find a job,” revealed an employee stationed at a client site of a technology firm.The chief executive and principal analyst of US-based HFS Research, Phil Fersht, validated the occurrence of widespread silent layoffs through performance evaluations, decreased recruitment, and postponed career advancements.“Tens of thousands of roles have been quietly phased out across large providers this year,” he said.According to Neeti Sharma, CEO of Teamlease Digital, outdated platform limitations and demands for specialised expertise are necessitating skill enhancement and workforce reduction. She projected these numbers could reach 55,000-60,000 or higher in 2025.Since July, Accenture and TCS have collectively announced more than 23,000 global layoffs. Accenture initiated an $865 million business optimisation initiative, which included reducing 11,000 positions globally between June and August.At a major IT corporation, the human resources department sends approximately 300 daily emails requesting IT support teams to retrieve laptops and disable employee access credentials.
Why are techies being fired?
As of Thursday’s September quarter results disclosure, TCS announced the departure of approximately 6,000 employees, representing 1% of its workforce, with a total reduction of 19,755 staff members. The company’s workforce numbered 593,314 at September’s end.Industry experts suggest that TCS and Accenture’s actions might influence other organisations to adopt similar practices, enabling cost management whilst increasing reliance on digital solutions, including AI-based technologies.“Those with 25 plus years of experience have received decent compensation for the remainder of their service, but those with about 10 years have been badly affected,” stated an impacted employee. “Those evaluated at PIP (performance improvement programme) faced no threat of being fired earlier, but they are being summarily fired in recent weeks.”According to sources quoted in the ET report, rather than direct terminations, the organisation of the employee quoted above is requesting resignations whilst offering compensation based on predetermined criteria.Historically, Indian IT organisations structured themselves around human resource management, promoting high-performing staff to supervisory positions instead of technical specialisation.“That worked when large fresher batches needed multiple layers of oversight,” Sharma observed. “But with automation and AI transforming workflows, this model now looks bloated.”The outsourcing sector, valued at $283 billion, faces significant challenges as it grapples with artificial intelligence disruption and economic uncertainty, causing delays in client decisions. The industry experiences tighter technology spending, leading to staff underutilisation whilst costs continue to outpace revenue growth. AI’s increasing capability to handle routine tasks is making numerous conventional positions obsolete.According to Sharma, the highest turnover rates affect middle-management positions, particularly those who advanced based on team management rather than technical expertise or innovative capabilities.“As AI tools start taking over routine tasks like reporting and coordination, a lot of these mid-level managers are finding it harder to stay relevant or shift into new roles, hence the highest volume of attrition currently is in the mid-management levels,” she said.Organisations heavily reliant on traditional consulting and workforce deployment are most affected, whilst companies specialising in products, data, cloud computing, AI and digital transformation maintain better positions, making selective recruitment in specialised areas.In the wake of the pandemic-driven expansion, the IT sector is now experiencing a period of realignment. Indian technology companies, which saw substantial growth during the COVID-driven digital surge, now confront multiple challenges including geopolitical tensions, economic deceleration and the impact of generative AI technology.The situation is further complicated by changing US policies in their primary market, particularly regarding immigration regulations and increased visa costs. The proposed escalation in H-1B visa fees and the introduction of the HIRE Act, which imposes taxes on organisations employing foreign workers, create additional pressures. Industry experts suggest these developments could raise operational expenses and affect discretionary project timelines, necessitating workforce adjustments.The technology services sector is witnessing a fundamental transformation from personnel management to competency-based organisation. Organisations are moving towards streamlined structures with specialist teams, emphasising depth of knowledge over hierarchical layers, as India’s IT sector adapts to the emerging AI landscape.“These are not simple cost cuts, they are about shifting roles to align with AI and digital priorities,” he said.“Accenture’s move signals an industry-wide reset for the AI era,” Fersht said.
