India AI-driven tech firings could derail middle class dreams
Companies like TCS rely on cheap skilled labour to produce software for global clients at low costs
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Indias showpiece software industry is facing a moment of reckoning.
The country biggest private sector employer Tata Consultancy Services (TCS) - also its largest IT services company - has announced it will cut more than 12,000 jobs at middle and senior management levels. This will reduce the firm workforce by 2%.
The Mumbai-headquartered software behemoth employs over half-a-million IT workers and is considered a bellwether for business sentiment across India $283bn software industry. It forms the backbone of formal, white-collar employment in the country.
The decision, TCS says, was taken to make the company "future ready" as it invests in new areas and deploys artificial intelligence at scale amid seismic disruptions in its traditional business model.
Companies like TCS have, for decades, relied on cheap skilled labour to produce software for global clients at lower costs, but this has been upended by AI automating tasks and clients demanding more innovative solutions, rather than just cost savings on manpower.
"A number of re-skilling and redeployment initiatives have been under way," TCS said in a statement, adding it will be "releasing associates from the organisation whose deployment may not be feasible".
"Across IT companies, people managers are being let go while the doers are being kept to rationalise the workforce and bring in efficiencies," Neeti Sharma, CEO of staffing firm TeamLease Digital told the BBC.
She added that "there been a massive spike" in emerging tech hiring in areas such as AI, cloud, data security, but it is not at the same intensity at which people are being fired.
TCS announcement also highlights the sharp "skills mismatch" in the country software industry, experts say.
As generative AI leads to a rapid enhancement of productivity, "this technology shift is forcing businesses to reassess their workforce structure and analyse if resources should be redirected toward roles that complement AI capabilities," Rishi Shah, economist with Grant Thornton Bharat told the BBC.
According to the industry body Nasscom, India needs a million AI professionals by 2026, but not even 20% of the countrys IT professionals are AI-skilled.
While up-skilling spends by tech companies have significantly spiked as they rush to prepare a new pool of AI talent for the future, those without the requisite skills are being shown the door.
2025-07-29
By
Anushka Tripathi
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