Tata Consultancy Services cuts 12,000 jobs amid India IT sector slowdown
India’s largest IT firm, Tata Consultancy Services, laid off over 12,000 employees last month. That’s about 2% of its global workforce, mainly hitting middle and senior management. It’s the biggest job cut in TCS’s history.
CEO K Krithivasan blamed “limited deployment opportunities and skill-mismatch,” dismissing AI as the cause. But analysts and Indian tech watchers see AI’s growing role as a disruptor in the traditionally labor-heavy Indian IT industry. 
The sector leans on India’s vast pool of low-cost engineers. Now, AI threatens to automate routine tasks while clients want more innovation. This shift risks shrinking job opportunities in a field that supports millions.
India churns out 1.5 million engineering graduates every year. The IT sector makes up about 7.5% of India’s GDP (FY 2023).
Nomura’s Sonal Varma weighed in on AI’s impact:
“AI adoption is a major challenge for India. Entry level routine jobs are being displaced, and mid-level jobs are transforming.”
“This creates the challenge for job creation for India, since the country needs to create about 8 [million] jobs annually.”
IT giants Infosys and Wipro also posted weak year-on-year growth, partly blamed on US tariff uncertainties that dampen client budgets.
ANZ economist Dhiraj Nim called the slow growth a possible “cyclical change” as US service exports soften. Still, he flagged AI as a major force to watch.
India’s urban unemployment rate ticked up to 7.1% in June, with youth unemployment nearly hitting 19%. That adds strain to an already tight labor market.
Standard Chartered’s Anubhuti Sahay warned the labor market woes might last years without more salaried jobs. Most job growth so far has been in low-wage self-employment.
Upskilling is critical. Around 20% of Indian youth joined AI-focused training programs, supported by Google.org and the Asian Development Bank. The government launched internships to build real-world skills.
Nim flagged a key factor: job displacement hinges on how well workers move up the skill ladder.
Nomura’s Varma issued a stark warning:
“If the economy is unable to adapt, this could lead to job losses, lower services exports, moderate urban consumption.”
“It could risk India getting stuck in the middle-income trap.”
India needs a shift to higher-value services and innovation to dodge a deeper job crunch. For now, the IT sector slowdown and AI disruption are shaking up India’s tech workforce—and the clock is ticking for solutions.
