TCS layoffs show Indian IT giants have missed the bus, job loss and pain ahead

India Today

3 days ago

Unless you are living a life without a smartphone, you must already be aware of it — TCS has announced that it will be reducing its headcount by 12,000 employees. The company is not explicitly saying that it is because of AI tools like Claude and Gemini, which are fairly competent at some of the work we do in our offices, but read between the lines and it becomes clear.advertisementThe TCS layoffs mark the beginning of an era where tools like ChatGPT can do enough work to make teams after teams, and employees after employees, redundant and unnecessary. This does not mean that IT jobs will vanish. It only means that we are in for a choppy ride. And by we, I mean people in India, the country that benefited greatly from the last three decades when the entire world turned into some sort of code and software.As a country, we have ridden an IT wave because of our familiarity with English, a culture of following instructions to the T, and the availability of millions of coders who are willing to work 60 hours a week at 1/10th the salary that someone in the US would demand.
In other words, before there was Claude, ChatGPT and Gemini — AI tools that are familiar with English, can follow instructions, and are cheap to run — there was your average Indian coder, almost like a human AI who could be trusted to follow guidelines and libraries created by the cracked engineers in Silicon Valley, and then do boring and repetitive tasks. Now, the same coder is at the risk of losing their job. The real AI is here. It is even cheaper and more efficient.Back in the late 18th and 19th centuries, machines replaced manual work. This was catastrophic for skilled manual labourers — think weavers — and horses. To keep society intact, the world invented knowledge work, elaborate bureaucracies, and the service industry. In the early 21st century, we are at a point where AI tools are good enough to replace knowledge work and disrupt the service industry. Again, it is going to be catastrophic for a lot of people, though horses will be spared this time. The Indian government, along with other governments, will soften the blow with new policies and probably more bureaucracy. But the hammer will fall in the coming years, and pain will be there.It is also the pain that, in some ways, TCL, Infosys, Wipro, HCL, Tech Mahindra and their ilk deserve. Despite a huge opportunity open to them in the last 20 years, they have been happy doing the unimaginative and lazy work and have kept billing their rich or unsuspecting clients for it.Silicon Valley creates libraries, programming languages and products. Indian coders use and service them. Instead of building novel expertise, the biggest flex of Indian IT giants has been to hire coders from Pilani at a salary that is less than that of a Starbucks barista in San Francisco. In other words, they have focused on arbitrage instead of building something unique. Their profits have not been invested in R&D or product development.advertisementIndia has been synonymous with servicing the tech industry, but only because the rest of the world, for whatever reasons, doesn't seem too enthusiastic about it. Europe, still flush with money from the colonial era and from intellectual property, doesn't want this work.Japan, Korea, China and Asian island nations until now did not have enough familiarity with English to do it on the scale India could. Skilled labour in the US is too pricey. The rest of the world just doesn't have enough knowledge, workers or stability to do what India managed in Bengaluru and Hyderabad.It is a bit of luck that made India an IT powerhouse and not necessarily our abilities. Though, it can be argued that a degree of luck, whether we are talking about individuals or societies, is needed for any success.The tragedy of India is that, despite the initial luck, due to which it reaped rich rewards for several decades, the IT giants of our country have been completely vision-less and risk-averse. Instead of realising their good fortune and working to build on it, they believe in their fantasy of being the genius IT giants. And now, when the tide is turning, our IT industry doesn't have a good anchor that can stabilise it.advertisementJust compare it with China. In manufacturing, as the factories shifted from Europe and the US to Asia, a number of Chinese and Korean companies quickly became large OEMs, somewhat like how Indian IT companies became support arms for the global IT giants.In the 1990s, the Chinese took the IP, research and design from Western companies and made products for them. But they did not stay OEMs. In a few years, they became product companies in their own right, first domestically and then globally. From BYD to Oppo, they all started as makers of parts or products for others. But gradually they expanded, with a vision to be manufacturers of something original.No Indian IT giant has made a transition like this. In a country famed for its supposed IT prowess, we don't have a proper operating system for phones or computers that we can call our own. In fact, in a country of IT giants, we don't have a locally-made media player, a chat app, a browser, even a proper video game, or maybe a file explorer that is as good as or better than its global counterparts. Even in the late 2010s, when it became clear that the next wave in tech is going to be around AI, Indian IT giants kept slumbering. It's not that they did not have money. They have plenty of profits coming in. But they had no vision. They never had any vision beyond the arbitrage.advertisementNow the chickens are coming home to roost. When you build an industry on the basis of arbitrage, sooner or later, it is going to be upended. This is what is happening in 2025 and will only gather pace.In a week or so, OpenAI is expected to launch ChatGPT 5 and there is chatter that this one is specifically going to be great at coding, better than even the Claude Opus 4, which is already considered a coding tool as good as an entry-level software developer.Give it another three to four years and the kind of work that our IT giants do will be manageable by AI systems. Humans will still be required, particularly for complex, challenging and novel work. But for that work, you may not need 10,000 employees. It could be the kind of work that employees do at Nvidia, an almost $4 trillion company, but with just 26,000 employees.advertisementIn comparison, TCS has over 6 lakh employees. A lot of these employees are going to find that in the next two to three years, ChatGPT will be able to do their work faster, more efficiently and cheaper.(Javed Anwer is Technology Editor, India Today Group Digital. Latent Space is a weekly column on tech, world, and everything in between. The name comes from the science of AI and to reflect it, Latent Space functions in the same way: by simplifying the world of tech and giving it a context)- Ends(Views expressed in this opinion piece are those of the author)