On 26 February, Block, a digital payments company cofounded by Twitter founder Jack Dorsey, laid off around 4,000 employees, or nearly 40% of its workforce, in one go. Just over a month later, on 31 March, Block head Dorsey, and Sequoia Capital partner Roelof Botha, a member of the payment company’s board, published a manifesto titled ‘From Hierarchy to Intelligence’. The meandering encyclical traces how middle management came into being “before the term existed”. It begins by examining how the Romans organized their troops, realising through centuries of warfare that “a leader can effectively manage somewhere between three and eight people”, to how the Prussian army was reformed after being routed by Napoleon during the Battle of Jena in 1806.
Prussia’s reformers, Dorsey and Botha noted, “created the General Staff, a dedicated class of trained officers whose job was not to fight but to plan operations, process information, and coordinate across units”. These staff officers were meant to support incompetent generals, providing the talent that might otherwise be lacking among leaders and commanders, according to the doctrine drawn up by General Gerhard von Scharnhorst, founder of the Prussian general staff.
In today’s era, however, Dorsey and Botha argued, traditional hierarchy and middle management “impede information flow” and are rapidly being replaced by artificial intelligence (AI). The duo outlined changes that are taking place at Block, noting that every company would eventually need to reckon with the same questions it faced.
India Inc is now confronting those questions. Experienced professionals are increasingly being made redundant across sectors, a consequence of AI absorbing white-collar work and global conflicts squeezing revenues and supply chains.
In 2024, research firm Gartner that “through 2026, 20% of organizations will use AI to flatten their organizational structure, eliminating more than half of current middle management positions.”
The impact of technology and global upheaval on jobs is not new—there was Y2K, the 2008–09 financial collapse, the pandemic. Crests and troughs have always been a reality. While jobs recovered from those events on the back of a rebound in growth, this time, the decimation appears permanent—because the middle management’s very demise is being perceived as a launchpad for growth and profitability.
Why it’s happening
The middle manager’s profile varies by industry, but in today’s workforce they are most likely a millennial—born between 1981 and 1996. In IT, where promotions move faster than in manufacturing, the middle order skews younger. In traditional industries, someone with five to 10 years of experience fits the bill.
“For 30 years, the middle layer existed because information had to move physically through people: the junior team produces work, the manager translates it upward, leadership decides, the manager translates that decision back down. That relay function was the job,” explains Phil Fersht, chief executive of HFS Research, a Massachusetts-based IT consulting firm. “AI now does that synthesis directly, which means the core justification for the middle layer has been removed, not reduced.”
For instance, the middle manager in IT services was, in practice, a relay station, says Fersht: pushing client requirements down to delivery teams and pushing status updates back up to leadership. That’s precisely the function AI now performs faster and without the distortion that comes from passing information through layers of people each managing their own position, he adds.
Bengaluru-headquartered recruitment firm Ciel HR facilitates hiring across blue- and white-collar roles, but is seeing growing reluctance among clients to fill middle-order positions. “I expect a 25–30% reduction in the workforce in junior to middle management over the next four to five years. Mid-level managers are stagnant. They are team leaders, typically with 5–15 years of experience, depending on the size of the company,” says Aditya Narayan Mishra, managing director and CEO of Ciel HR. “If you need one manager for six juniors today, going forward you will need one senior for every eight in the lower rungs.”
One of Ciel HR’s clients, a manufacturing company, used to rely on store sales staff escalating complex queries and discount decisions to store managers. The company is now experimenting with AI agents programmed to resolve such queries.
On a global level, “our research shows that 47% of organizations still operate in traditional hierarchies today, but only 13% expect to in three years. That’s not a hiring freeze. That’s nearly the entire Global 2000 telling you their org chart will look fundamentally different by 2029”, says HFS Research’s Fersht.
Sectors impacted
The IT industry, which created artificial intelligence, is ironically the sector that has been worst hit by the technology. Tata Consultancy Services retrenched roughly 12,000 employees in FY26, “primarily in the middle and senior grades”, in its words. TCS expects to onboard 25,000 freshers in FY27, a sharp drop from the 44,000 it had planned for FY26.
Indeed, at the company’s annual general meeting last week, chairman N. Chandrasekaran was blunt about : “Will it definitely lead to a decrease in hiring? Absolutely. The company will not be hiring the kind of numbers it used to hire—because certain portions of the work, in the current scheme of things, will go to agents.” Going further, he said the company would have as many AI agents as human staff. TCS had a headcount of just under 600,000 at the end of March.
Cognizant, another IT services company, plans to cut roughly 4,000 jobs, according to a from 29 April.
“IT services built its entire economic model on the middle layer,” explains Fersht. “The traditional structure was a pyramid: a thin senior layer of architects and leaders, a thick middle band of delivery managers, project leads, and specialists, and a massive junior execution layer doing the coding, testing, and documentation.” The middle band, he implied, is the most vulnerable today.
AI now does a meaningful share of what juniors used to do, Fersht adds, which means “you need fewer juniors, which means you need far less coordination of juniors, which is what the middle layer existed to provide”.
In the US, 97,006 jobs were cut in May alone, with AI being cited as the leading reason, according to Chicago-headquartered global outplacement and executive coach firm Challenger, Gray & Christmas. It noted that technology jobs accounted for more than a third of the cuts that month. As of May, it added, American employers had announced 397,755 cuts this calendar year, with AI being the leading reason for three months in a row.
Among the major names that have laid off staff in droves are Meta, Amazon, Oracle, Microsoft and Salesforce, according to media reports. Google parent Alphabet has not seen mass layoffs due to AI but has been letting people go in dribs and drabs.
Oracle had instituted a , part of 30,000 laid off globally, earlier this year to fund a multibillion-dollar AI infrastructure buildout. Taking to community network Reddit a couple of months ago, one engineer working for the enterprise software company said he was among those who had been laid off . “I was sacked (my entire team) as part of the mass layoff in Oracle 2 weeks back. The market is so dry that I am not getting calls,” the engineer wrote, seeking job references.
In the consulting and audit business, research teams tasked with diving into data—tracking rivals, assessing regulatory shifts, modelling market scenarios—are facing displacement. So are production services teams that build the slide decks and reports that are the hallmark of top-tier consulting. Both functions can now be largely performed by AI.
Against the middle
Across industries adopting AI, those who earn ₹16–40 lakh will be affected the most, says Anshuman Das, CEO and co-founder of recruitment firm Careernet notes. Das highlights that there are four compensation brackets that India Inc follows.
Absolute freshers get recruited for ₹4 lakh and slightly above; then come two sets of middle management—the first one gets ₹16–20 lakh; the ones above them, who have more specialised skills and domain knowledge, draw a compensation of ₹30–40 lakh. After that come the seniors, going up to the C-suite.
“It is the workforce that gets ₹16–40 lakh who will be retrenched. They have more than six years of work experience and unless they acquire domain expertise, AI will replace them,” says Das. “The demand for lateral hires with six-plus years of experience has fallen by at least 25% for us in the last year.”
The campus ripple
While the managerial cadre bears the brunt today, the impact is beginning to be felt even in campus recruitment, forcing major B-schools to recalibrate. The Indian Institute of Management at Ahmedabad is developing an AI policy to define how students and faculty may use such tools. “The ability to understand how AI is impacting business models, and learning from industry practitioners, helps students—firms are now benchmarking candidates using AI,” says Viswanath Pingali, chairperson of the placement committee at IIM-A.
Over the past year, selection processes at IIMs have begun testing candidates on how effectively they use prompts to achieve outcomes as companies want to assess problem-solving ability with AI tools.
Many management colleges, however, cannot afford similar training, a gap that may further disadvantage their students in the midst of a hiring slowdown.
The wider fallout
Sabina Dewan, founder of the JustJobs Network, notes that the scale, speed and synchronicity with which multiple forces—from technological advances and trade shocks to global wars—are disrupting the job market is unprecedented.
“Jobs that were once considered ‘good jobs’ are going away because of AI. Even though less than 10% of our jobs are formal employment, these losses will have cascading effects on other parts of the economy,” says Dewan. “All this impacts the hopes young people have for their future,”
Formal jobs offer benefits such as a provident fund, medical insurance and gratuity, something that informal jobs, for instance in agriculture and construction, do not.
“You will have to reskill people multiple times for a constantly changing labour market. We are struggling to skill people well and fast enough the first time around, let alone reskill them repeatedly. Most of the workforce does not have the skill sets needed to stay employed in a high-tech economy,” points out Dewan.
Rohini Lakshane, an independent researcher and technologist, warns that not enough time is being given for what she calls the “transfer of roles” driven by AI. “Who decides which profile gets axed because of AI? There are several instances where a backend engineer is told to ‘vibe code’ for front-end work. It works in the short term, but will this transfer of roles play out well for companies in the long run,” she asks.
Frontend engineers build the visual, client-facing parts of websites and apps, while backend engineers build the invisible server-side infrastructure. Vibe coding—where engineers prompt AI models to write and debug code—has already raised questions about the need for coders at all.
These fast-paced developments are also taking a mental toll on those affected. Last year, a small study investigating the psychological impact of AI-driven job losses on Indian IT professionals was . “…the findings revealed that the experience of automation-related job loss is deeply personal and psychologically complex, marked by emotional shock, identity erosion, future-oriented anxiety, social withdrawal, and varied coping responses,” the authors wrote in their conclusion. “Participants’ narratives underscore that the impact of technological disruption extends far beyond economic concerns, penetrating the core aspects of self-worth, purpose, and psychological security.”
The state of the industry today appears to be affecting the marital prospects of the men in the IT industry, as well. “Because of AI and tech layoffs, my uncle no longer wants a software engineer as a groom for his daughter,” wrote one user on Reddit. “He thinks the profession has become too unstable and would prefer someone in a government job, medicine, or another field he considers more secure.”
So, what is the way forward for the middle manager? Should he or she give it all up and turn his home into an AirBnB? Shri Fersht has the last word: “If your seniority is currently expressed mainly through your team size or your meeting calendar, that needs to change,” he says. “The sooner you start being the person who does the highest-value work in the room rather than the person who organizes who does it, the better positioned you’ll be.”