Layoffs in India’s technology sector are once again in focus, with , IT services companies and startups.
The trend has raised a key question. Are companies correcting overhiring from the past, or is artificial intelligence starting to reduce the need for certain roles?
Recent developments suggest that both factors are at play, with the industry going through a deeper shift.
Job cuts have been reported across segments, showing that the trend is not limited to a single type of company.
as part of a broader global restructuring. , affecting around 500 corporate roles in India.
Microsoft has continued workforce reductions through 2025, impacting its large India employee base.
In the IT services space, companies such as TCS and Infosys are seeing what industry reports describe as “silent layoffs”, including delayed onboarding and workforce rationalisation.
Startups are also adjusting. Companies like Zepto have reduced headcount as they respond to changing business conditions.
These developments suggest that layoffs are becoming a broader trend across the tech sector.
While some of the layoffs can be linked to aggressive hiring during the post-pandemic boom, experts say the situation goes beyond a simple correction.
Murali Vivekanandan, Founder and Chairman of Ideas2IT, said the industry is entering a new phase.
“Cycles like this are not new, but what is changing is what resilience looks like,” he said.
He added that the role of is becoming more central.
“As AI capability improves, more of this can be expected.”
“Companies that deeply leverage AI will thrive, and others will be impacted.”
This suggests that while overhiring may explain part of the job cuts, the larger driver could be a shift in how companies operate.
Artificial intelligence is increasingly influencing how companies build teams and deliver work.
Vivekanandan said this shift is already visible.
“As AI capability improves, it will increasingly influence how companies operate and how teams are structured,” he said.
This could lead to fewer roles in areas that involve repetitive or process-based work, as automation improves efficiency.
At the same time, companies are focusing on doing more with smaller teams.
Vivek Khemani, Governing Council Member at the Tech Entrepreneurs Association of Mumbai, said the changes go beyond hiring and extend to the business model itself.
“The IT sector in India is going through a major transformation,” he said.
He pointed to the role of generative AI.
“Generative AI technology is bringing major acceleration and automation to workflows of IT services and IT-enabled services companies.”
Khemani added that companies are also rethinking how they deliver services.
“The unit economics of the tech services business will transition from pure services to ‘services as software’.”
“Traditional labour-centric models will need to become more outcome and output centric.”
This means companies may need fewer people for the same work, as productivity improves.
Khemani said companies are likely to reshape their workforce.
“Domestic IT companies and global capability centres will re-cast their talent pools,” he said.
“The recast will be in terms of size as well as changing the mix.”
This could mean both fewer employees overall and a different combination of skills within teams.
Despite layoffs, experts say hiring continues, but in different areas.
“While parts of the market are contracting, hiring continues in certain areas,” Vivekanandan said.
“This is not necessarily a reaction, but a continuation of how some organisations are choosing to build.”
Khemani also pointed to new roles emerging in the market.
“New skills will emerge. Roles like AI engineer or forward deployed engineer represent this change,” he said.
This indicates that while some jobs are being reduced, new opportunities are also being created.
Both experts stressed that skills will play a key role in determining job security. “AI fluency is no longer optional. It is foundational,” Vivekanandan said.
“The ability to work effectively with AI will determine how relevant, productive and valuable individuals remain.”
Khemani added that human-centric skills will also become important.
“As efficiency goes up, empathy might suffer,” he said.
“Skills around design, human psychology and systems engineering will become very relevant.”
Experts expect the trend to continue as companies adapt to new technologies and business models.
“As AI capability improves, more of this can be expected,” Vivekanandan said.
“These are difficult moments for the industry.”
He added that the focus now is on adapting.
“The focus remains on building resilience through capability, continuous upskilling, and adapting to an AI-first world.”
The current layoffs trend in India’s tech sector appears to be a mix of short-term correction and long-term change.
While companies are adjusting for past hiring decisions, the growing role of AI is reshaping how work is done and how teams are built.
For employees, this means that staying relevant will depend on the ability to adapt to new technologies and changing job roles.
As the industry evolves, layoffs and hiring are likely to happen at the same time, but in different parts of the job market.