That’s the beauty of capitalism: asking such questions is not only possible, but in some cases, heartily appreciated.
Mint sets out to do just that.
What happened to India’s white-collar job market?
India’s largest private-sector employer, Tata Consultancy Services (TCS), dropped a bombshell last week by announcing plans to lay off 2% of its global workforce, over 12,000 employees, in phases this financial year. The move comes as the company invests in next-generation technologies and scales up its deployment of artificial intelligence (AI). The cuts will primarily affect mid- and senior-level staff.
Other IT majors are also slowing hiring or trimming headcount amid AI-driven automation and persistent growth headwinds. Infosys reported a net addition of just 210 employees in Q1FY26 compared to the previous quarter, while Wipro’s workforce shrank by 114 and Tech Mahindra’s by 622 on a sequential basis.
In addition, Wipro is reportedly planning English competency tests for senior executives. Those scoring poorly could potentially be placed on performance improvement plans, which are often seen as a precursor to layoffs.
At HCL Technologies’ post-results call last month, CEO C Vijayakumar highlighted the impact of AI on entry-level jobs.
“Of course, we have had a good amount of people released due to the productivity improvements. Now, not all of them are readily redeployable, because the requirements for some of the entry-level or lower-end skills are being addressed through automation and other elements,” he said on 14 July.
“The training and the redeployment time is longer. Some of them will be redeployed, but for others, it may not be possible. So, some amount of change in the industry is also kind of causing this,” Vijayakumar added.
Do job cuts have any impact on share price performance?
Historically, large-scale layoffs tend to lift market sentiment, as they signal cost-cutting and potential improvements in profitability. Such moves also reassure investors that management is willing to take “tough calls”, though, of course, it’s easier to do that when your own job isn’t at stake.
When Google announced in January 2023 that it would lay off 12,000 employees, its stock jumped nearly 5% on the Nasdaq. Similar rallies followed workforce reductions at Meta, Microsoft, Salesforce, and other tech majors during the post-pandemic period. Earlier “restructuring” efforts at companies like GE, Ford, and HSBC also sparked sharp increases in their share prices.
Does the same hold true for Dalal Street?
In India, large-scale layoffs are rarely announced publicly, and major job reductions often happen quietly, making data on their market impact limited.
But in the current case of the IT sector, the reaction has been notably different from global trends. Since TCS announced its planned layoffs, the stock has fallen around 4%, while other IT majors have declined between 1.5% and 6%.
Why are IT stocks down if AI is potentially reducing their wage bill?
Because AI threatens to disrupt the very foundation of India’s software services industry.
For decades, India’s IT outsourcers have operated on a labour-intensive model, managing clients’ back-end processes and billing based on headcount. But as AI automates large portions of this low-end work, firms are being pushed towards leaner, more specialized service models. The challenge? No one yet knows what this post-AI business model will look like, or whether the traditional outsourcing model will survive at all. And while markets can absorb good news and bad, what they fear most is uncertainty.
What jobs are at risk of being replaced by AI?
In a paper published last month, Microsoft researchers assigned “AI applicability scores” to various occupations, measuring the extent to which AI can perform key tasks within those roles. Jobs with the highest scores included translators, historians, sales representatives, writers, customer service agents, telephone operators, and brokerage clerks. At the other end of the spectrum were mostly blue-collar roles that require physical labour, such as nurses, construction workers, hazardous material removal personnel, ship engineers, and tyre repairers.
A high AI applicability score doesn’t mean the entire job can be automated today, but it does signal that large parts of it could be performed by AI. As generative AI evolves rapidly, the white-collar workforce is entering a period of profound transformation.
What will be the consequences for India if layoffs become widespread?
In India, large-scale layoffs are more likely to signal macroeconomic distress than improving corporate profitability.
Unlike developed economies such as the US or Europe, where job losses, while painful, are cushioned by stronger social safety nets and more fluid labour markets, India lacks the same resilience. A significant slowdown in the IT sector could trigger a ripple effect across real estate, FMCG, automobiles, and travel.
Not all experts, however, subscribe to this pessimistic view. Some argue that, much like the computer revolution spurred new growth and job creation, the productivity gains from AI could eventually prove beneficial.
But for that to happen, these technologies must be directed toward reskilling the workforce, improving efficiencies across sectors, and enabling new forms of employment. Until then, India’s demographic dividend risks slipping into a demographic liability.
