Tata Consultancy Services’ decision to cut more than 12,000 jobs is being seen as the first major sign of an artificial intelligence (AI)-driven transformation that could displace as many as half a million workers in India’s huge outsourcing industry over the next two to three years, industry experts have warned.
TCS, India’s largest private-sector employer, announced the reduction – equivalent to around 2% of its workforce – in late July, citing skill mismatches rather than AI-led productivity gains. However, analysts say the scale of the cuts, the largest in the company’s history, marks the start of a sector-wide shift as AI adoption accelerates.
The country’s technology services sector employed 57 lakh people as of March 2025, contributing over 7% to GDP and playing a pivotal role in the expansion of India’s middle class. But the growing use of AI in functions ranging from coding to software testing and customer support is set to fundamentally reshape the workforce, reducing demand for traditional roles and creating pressure for employees to re-skill.
The most vulnerable groups, according to analysts, include people managers with limited technical expertise, quality assurance staff, and infrastructure management teams responsible for basic tech support and network maintenance.
Ana analyst estimated that 4,00,000 to 5,00,000 professionals could lose their jobs over the next few years, with roughly 70% of those affected having between four and 12 years’ experience. This fear stems from the TCS layoffs as it may dampen consumer demand in sectors like tourism, luxury goods, and long-term investments such as property.
Major IT firms – including Infosys, HCLTech, Tech Mahindra, Wipro, LTIMindtree and Cognizant – collectively employ more than 4,30,000 people with between 13 and 25 years’ experience increasingly in the firing line.
TCS, which had a workforce of more than 6,13,000 before the cuts, said it is preparing to be “future-ready” by investing in new technologies, entering new markets, and deploying AI at scale both internally and for clients. The company did not clarify how many job losses were directly tied to AI or why the affected employees could not be redeployed.
For those impacted, the outlook is bleak. It is very difficult for the laid-off middle-age people to get new jobs. Others still in the TCS have raised concerns about tighter “bench” policies, reduced bonuses for senior staff, delayed onboarding, and deteriorating morale.
Since the 1990s, the outsourcing sector has been a major engine of upward mobility for Indian engineers, but revenue growth has slowed as overseas clients contend with inflation and uncertainty over US trade policy.
The tech industry is at an inflection point, as AI and automation move to the very core of how businesses operate. Now the onus is on the individual to reinvent or re-skill themselves.
