Why Indian IT Giants Are Cutting Jobs Despite Revenue Growth in 2025
India’s leading IT companies, such as Tata Consultancy Services (TCS), Infosys, Wipro, and HCLTech, are undergoing a paradoxical transformation. Despite reporting stable or growing revenues in Q1 FY26 (April-June 2025), these firms are reducing headcounts or slowing hiring significantly. For instance, TCS cut approximately 12,260 jobs (2% of its workforce), while Infosys has nearly halted fresher onboarding. This shift marks a departure from the traditional model where revenue growth was closely tied to headcount expansion. So, why are these IT giants trimming jobs even as their financials remain robust? This article explores the strategic, technological, and structural changes driving this trend and its implications for India’s IT workforce.
Financial Performance: Growth Amid Job Cuts
In Q1 FY26, major Indian IT firms reported positive, though modest, revenue growth:
- TCS: Revenue rose 1.3% year-on-year to ₹63,437 crore, with net profit up 5.9%. However, the company reported one of its weakest Q1 performances since 2020 and reduced its workforce by 2%, equivalent to 12,260 employees.
- Infosys: Revenue grew 7.5% to ₹42,279 crore, but the company hired only 15,000 trainees in FY25—a sharp decline from previous years—and paused fresher onboarding while projecting flat to 3% revenue growth for FY26.
- HCLTech: Revenue increased by 8.1%, outperforming peers, yet the company slowed net employee additions and recruitment.
- Wipro: The company adopted targeted layoffs, focusing on streamlining specific roles while maintaining revenue stability.
Despite these job cuts, revenue per employee is rising across the sector, signaling a shift toward higher productivity with fewer workers. This marks a significant change from the industry’s historical reliance on large-scale hiring to drive growth.
Key Drivers of Job Cuts
Several factors are driving these layoffs and hiring slowdowns, even as revenues grow:
1. AI and Automation
Indian IT firms are heavily investing in generative AI (GenAI) and automation to enhance service delivery. For example:
- TCS’s CEO emphasized, “We have been deploying AI at scale… ways of working are changing. We need to be future-ready and agile.” AI-driven tools are automating repetitive tasks, reducing the need for entry-level hires.
- Infosys and HCLTech are integrating GenAI platforms into their workflows, boosting efficiency and allowing fewer employees to handle larger workloads.
- Automation is particularly impacting lower-rung roles, such as data entry, basic coding, and testing, which were traditionally filled by fresh graduates.
2. Shift from Pyramid to Skills-Based Models
Historically, Indian IT firms operated on a pyramid model, hiring large numbers of entry-level employees and fewer senior professionals. However, automation has disrupted this structure:
- Companies are now prioritizing niche skills in areas like AI, cloud computing, cybersecurity, and data analytics.
- This shift has led to tougher training and screening processes. For instance, Infosys has implemented stricter assessments, resulting in higher rejection rates for fresher trainees.
- The focus on specialized talent means fewer opportunities for entry-level hires and a leaner overall workforce.
3. Cost Optimization and Efficiency
Even with revenue growth, IT firms are under pressure to improve margins and remain competitive in a global market. Reducing bench size (unutilized employees) and focusing on high-value roles help achieve these goals. The emphasis on revenue per employee reflects a strategic pivot toward quality over quantity.
4. Changing Client Expectations
Clients increasingly demand advanced technologies and faster delivery, pushing IT firms to invest in skilled professionals rather than large teams. This trend favors experienced hires or reskilled employees over mass fresher recruitment.
How IT Giants Are Responding
Each company is navigating this transformation differently, but common themes include workforce optimization and reskilling:
- TCS:
- Reduced its workforce by 12,260 jobs to align with a “future-ready” strategy.
- Faced scrutiny from the Ministry of Labour and Employment, which summoned TCS for a meeting on August 1, 2025, following a complaint by the Nascent Information Technology Employees Senate (NITES). The complaint alleged that TCS delayed onboarding over 600 experienced professionals despite issuing offer letters.
- Continues to invest in AI and automation to boost productivity.
- Infosys:
- Paused fresher onboarding and reduced trainee hiring to 15,000 in FY25, a significant drop from prior years.
- Introduced stricter assessments, leading to layoffs among trainees who fail to meet new standards.
- Focused on upskilling existing employees in AI, cloud, and other high-demand areas.
- HCLTech:
- Slowed net employee additions while maintaining strong revenue growth.
- Invested in GenAI and automation to streamline operations.
- Wipro:
- Implemented targeted layoffs to eliminate redundant roles.
- Prioritized hiring for specialized skills to meet client demands.
Impact on the Workforce
The shift toward automation and skills-based hiring has significant implications for India’s IT workforce:
- Shrinking Bench Size: IT firms are reducing the number of employees kept on reserve (the “bench”), leading to leaner teams and fewer opportunities for freshers.
- Reduced Fresher Absorption: The slowdown in campus recruitment is putting pressure on engineering colleges, as companies hire fewer graduates and prioritize niche talent.
- Need for Reskilling: Even mid-career professionals must continuously upskill in areas like AI, cloud, and cybersecurity to remain relevant.
- Job Insecurity: Layoffs, particularly among trainees and entry-level employees, have raised concerns about job stability in the sector.
Outlook: A New Era for Indian IT
The Indian IT industry is redefining its growth model. No longer reliant on expanding headcounts, companies are betting on technology-driven productivity and specialized skills to drive revenue. This shift has several long-term implications:
- Engineering Colleges: Institutions must adapt curricula to focus on AI, cloud, and other emerging technologies to prepare students for a changing job market.
- Talent Development: Continuous learning and certifications in high-demand areas will be critical for both new and existing employees.
- Global Competitiveness: By prioritizing efficiency and innovation, Indian IT firms aim to maintain their edge in a competitive global market.
However, this transformation also poses challenges. The reduced focus on fresher hiring could limit opportunities for young professionals, while the emphasis on reskilling places pressure on employees to adapt quickly. Additionally, incidents like the TCS onboarding delays highlight the need for better communication and transparency during restructuring.
Conclusion
Indian IT giants like TCS, Infosys, Wipro, and HCLTech are cutting jobs or slowing hiring despite revenue growth, driven by AI, automation, and a shift toward skills-based workforce models. While these changes position the industry for future growth, they also create challenges for freshers and mid-career professionals who must adapt to new demands. As the sector moves toward a quality-over-quantity approach, the Indian IT landscape is entering a new era—one that prioritizes efficiency, innovation, and specialized talent over traditional headcount expansion.
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