Tech lay-offs' cascading effect on India's economy
About 90 out of 100 senior tech professionals earning between ₹45 lakh and ₹70 lakh per annum today carry 'a solid fear of losing jobs on their faces,'' observed an IT sector recruiter who had interviewed them for various positions in the last one month.
This fear seems to be spreading rapidly among techies. Following Microsoft's lay-offs on May 13, Blind, which specialises in anonymous professional communities and workplace feedback, surveyed 3,543 U.S. professionals to gauge job insecurity across companies. Respondents were asked just one yes/no question: 'Do you think you'll lose your job in the next year?' Almost half, 47%, said 'yes'.
'Elephant in the room'
'The fear of getting laid off is the biggest elephant in the room for the majority of senior and super senior tech professionals in India today. Any mass firing announcements by bellwethers can instantly bring down the morale of the entire industry,'' said B.S. Murthy, CEO Leadership Capital, a CXO hiring firm based in Bengaluru.
The context of this fear is clear. Multinational corporations have eliminated more than 1,05,000 positions worldwide this year. 20% of there were in India and some 45% of the lay-offs were in redundant positions in HR, support, content and coding, said Tholons in a study titled Layoffs Landscape. Tholons is a technology, innovation and investment firm with offices in Bengaluru and New York.
Major tech players including Meta, Amazon, and Indian start-ups have trimmed approximately 28,000 domestic positions since January 2025, while Microsoft laid off about 6,000 employees in its latest round of job cuts, affecting several divisions across the company and geographies, including India. This has led to panic right up to the top in the tech sector, according to industry observers.
'What began as post-pandemic corrections is now a permanent structural change catalysed by AI. A squeeze in the global tech market has drastically changed the economic realities for all,'' said Avinash Vashishtha, former chairman and MD, Accenture (India) and executive chairman at Tholons.
Why the squeeze?
The reason is, Fortune 1000 global tech buyers have started decreasing their IT budgets and they won't be spending anything more this year than what they spent last year for technology buying. 'Large corporations are not spending any additional money this year, instead they want things to be done with fewer people and with less money,'' said a CTO at an Indian tech firm not wanting to be identified.
According to him, the business outlook for technology in America is not looking good, leading to board members of large tech buying firms impressing upon their respective IT heads to cut budgets by 10-20%. This means bad news for tech providers the world over, including Indian systems integrators.
Under this changing market scenario, tech vendors, with a new mandate to offer additional value for less cost, are forced to innovate, and invest in AI-driven automation.
Since the advent of generative AI such as ChatGPT, things have changed drastically for the tech industry. And with the emergence of DeepSeek, with its large language model supporting technical reasoning, cost-effectiveness, and efficiency, many tech providers, including competitors like ChatGPT, are doubtful of their future in providing AI solutions.
Phil Fersht, CEO and Chief Analyst at London-based HFS Research said, a majority of global IT buyers prefer to approach niche specialist firms for their AI investments than traditional services firms.
'Many of the leading Indian firms lack depth of resources in specialist consulting and are too focused on lower cost delivery talent,'' he opined.
According to Mr. Fersht, the impact of tariffs and ongoing uncertainty is also putting great strain on tech buyers.
Indian tech firms currently have excess staff in two categories: senior managers and managers. The 'bulging middle' typically refers to managers who are between senior leadership and front-line employees.
'When automation fully sets in, tech firms may eliminate a large number of people in these two senior layers,'' Mr. Murthy predicted.
However, Kamal Karanth, co-founder, Xpheno, a specialist staffing firm argued despite sustained headwinds and adversities in the market, the last four fiscals had witnessed net headcount grow in the Indian tech sector.
Macro-economy effect
Indian tech sector, according to Nasscom estimates, contributed over $283 billion to India's GDP in FY25. Of this an overwhelming $225 billion were in export earnings and another $58 billion in domestic business. Nasscom wagers that the sector is on a trajectory to reach the $300 billion mark in the current fiscal, with the industry expected to contribute $1 trillion to India's GDP by 2030.
Industry watchers said any meltdown in the global tech industry could trigger more lay-offs, which could impact the Indian economy in multiple ways including a shrinkage in long-term asset creation, decline in car purchases, postponement of first/second home buying, trimming spends on expensive lifestyle products, refraining from foreign holidays and even shopping and eating out could be put on a 'judicious mode''.
'With chances of more lay-offs in the tech world, banks may not easily give loans. This scenario will impact home/apartment sales and car/high-end bike sales,' said a senior executive at a leading bank.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
14 minutes ago
- Mint
Buy or sell: Vaishali Parekh recommends three stocks to buy today — 12 June 2025
Buy or sell stocks: The Indian stock market continued to trade volatile for the sixth straight session on Wednesday. The Nifty 50 index ended higher for the sixth straight session and finished at 25,141. The BSE Sensex gained 123 points and closed at 82,515, while the Bank Nifty index went off 169 points and closed at 56,459. Sectorally, oil & gas, IT, and pharma were the major gainers, demonstrating strength even in a consolidating market. However, Nifty PSU Banks, FMCG, and metal sectors ended the day in the red. In a change from recent trends, the Nifty Mid-cap and Small-cap indices broke their winning streak today. The Nifty Mid-cap 100 Index fell by 0.49%, while the Nifty Small-cap 100 Index went down by 0.53%. However, market breadth remained decisively positive, with advancing stocks significantly outpacing declining ones, as indicated by a BSE advance-decline ratio of 1.24. Vaishali Parekh, Vice President of Technical Research at Prabhudas Lilladher, believes the Indian stock market bias has turned slightly cautious as the Nifty 50 index slipped after hitting 25,200 levels. However, the key benchmark index has closed above 25,116, meaning the positive sentiment remains intact. The Prabhudas Lilladher expert said the 50-stock index is facing a hurdle at 25,200, and the index may soon touch 25,600 after breaking above 25,200 on a closing basis. Speaking on the outlook of the Nifty 50 today, Vaishali Parekh said, "The Nifty 50 index, after consolidating since the last two days, witnessed a volatile session with the initial half progressed ahead to scale the 25,200 zones while post-lunch session succumbed to profit booking to end near the 25,150 level with sentiment slightly turning cautious. The index has the 25,000 zones as the near-term support, while on the upside, the 25,500 level can be expected in the coming sessions once there is a breach above the hurdle of 25,200 levels, with overall bias maintained strong." "The Bank Nifty index has witnessed another session of profit booking to slip further from the peak made near the 57,000 zone, and with the 55,800 to 56,000 band maintained as the important support from the current level, the index is still in the strong territory but would need a decisive breach above the 57,000 level to anticipate for fresh upward move in the coming days to maintain the positive bias intact," said Parekh. Parekh said that today, support for the Nifty is at 25000 levels, while resistance is at 25,300. The Bank Nifty will have a daily range of 56,000 to 57,200. Regarding stocks to buy today, Vaishali Parekh recommended these three buy or sell stocks: Lloyds Enterprises, Lupin, and Natco Pharma. 1] Lloyds Enterprises: Buy at ₹ 73, Target ₹ 83, Stop Loss ₹ 70; 2] Lupin: Buy at ₹ 2028, Target ₹ 2150, Stop Loss ₹ 1980; and 3] Natco Pharma: Buy at ₹ 935, Target ₹ 1000, Stop Loss ₹ 900. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
New Indian Express
15 minutes ago
- New Indian Express
India hopes for trade fair and square with US
NEW DELHI: Even as India is racing against time to clinch a trade deal with the US before expiry of the July 9 deadline, when the 90-day exemption period for implementation of reciprocal tariff gets over, sources say that the first phase of the deal would only address the low-hanging fruits. 'The trade talks will be in multiple phases, but the first phase should end before July 9,' said an anonymous government source. With US president Donald Trump announcing a deal with China on Wednesday, India would be in a hurry to conclude the first phase before July 9. The US has also finalized a trade deal with the UK. India was the first country to start negotiating a trade deal with the US. In an interview with French newspaper Le Figaro on Tuesday, Foreign Minister S Jaishankar had said he is hopeful of reaching an agreement with US before the reciprocal tariffs kick in. A US delegation which visited India had a four-day meeting with Indian negotiators. The meeting ended on Tuesday. The talks veered from tariff rates, better market access, digital trade, and tariff on agriculture and allied goods. The two teams reportedly discussed the issue of a 50% tariff on steel and aluminium. India has threatened retaliatory action against the US over doubling tariffs on steel and aluminium.
Economic Times
19 minutes ago
- Economic Times
UK to boost 'homegrown talent' in new AI skills drive
UK Prime Minister Keir Starmer on Monday pledged to boost "homegrown talent for the AI age" by teaming up with tech giants to train 7.5 million workers in artificial intelligence skills. Speaking at the start of London's Tech Week, with a line-up of speakers including Nvidia CEO Jensen Huang, Starmer said: "In this global race, we can be an AI maker and not an AI taker." Starmer was due to have a one-on-one conversation with the chief of the star Silicon Valley semiconductor firm whose chips are critical for artificial intelligence applications and of the event bringing together industry giants, Starmer announced a government-industry partnership to train 7.5 million workers in AI skills, including in using chatbots and large language models to boost firms including Nvidia, Google, Microsoft and Amazon committed to make training materials freely available to businesses over the next five years. Google EMEA region President Debbie Weinstein called it a "crucial initiative" essential for developing AI skills, unlocking AI-powered growth "and cementing the UK's position as an AI leader". In his opening speech, Starmer said Britain must build "the digital infrastructure that we need to make sure AI improves our public services".The UK has a "responsibility" to "harness this unprecedented opportunity and to use it to improve the lives of working people", Starmer added."We are going to build more homes, more labs, more data centres, and we're going to do it much, much more quickly." Economic growth His government has pledged to fire up the UK's flagging economy, including with "pro-growth" AI regulations to attract tech investment and turn Britain into an "AI superpower"."We are putting the power of AI into the hands of the next generation -- so they can shape the future, not be shaped by it," Starmer said in a press release before the British leader unveiled £187 million ($253 million) in funding to help develop tech abilities including training for one million secondary school students, as part of its "TechFirst" called it a "step change in how we train homegrown talent for the AI age".The investment will "embed AI right through our education system", he said, announcing nearly £150 million in undergraduate and PhD research scholarships in AI and also announced a "commitment from Nvidia to partner on a new AI talent pipeline", including through expanding a Nvidia lab in Bristol, southwest UK's AI sector is valued at £72 billion, employing over 64,000 people, and is projected to exceed £800 billion by 2035. It was growing 30 times faster than the rest of the economy, according to government figures from 2023 -- an "incredible" rate, according to speakers at the tech conference include the CEO of Mistral AI, Arthur Mensch, the UK's Science Secretary Peter Kyle and Markus Villig, founder of ride-hailing app Bolt.
