TCS layoffs reflect the challenges of a sector increasingly relying on AI
The IT sector in India has been a major source of employment, especially so in recent years. As per a report in this paper, in the big five IT companies — TCS, Infosys, Wipro, HCL Technologies and Tech Mahindra — employment went up from 11.5 lakh in March 2020 to 15.34 lakh by December 2024 as demand for IT services and digitisation surged post the pandemic. To put these employment figures in perspective, the Indian Railways employed more than 12.5 lakh regular employees as of 2023-24. But, these years have also witnessed two other developments — the advent of AI and Donald Trump's second term — which are reshaping the operating environment in unprecedented ways. The rapid adoption of AI and automation across the world has dramatically altered the business milieu. And not just in the IT sector, which has been affected, but others as well. Alongside, the economic uncertainty unleashed due to Trump's policies has impacted firms' investment and spending decisions. These have raised questions over the future of the Indian IT sector.
Cracks are already appearing in the sector's business model — a model that has relied on the country's educational institutions to churn out software engineers at scale and on wage arbitrage. The question is, if over the coming years, AI and automation make large swathes of IT jobs redundant, and the wage arbitrage with other economies reduces, then, where does India's competitive advantage lie? Considering that Indian IT firms do not allocate large sums of money for research and development — for instance, the consolidated R&D and innovation expenditure for TCS was Rs 2,630 crore in 2024-25 (around 1 per cent of its turnover), and the standalone R&D spending of Infosys was Rs 850 crore in 2025 (0.62 per cent of its revenue) — will firms be able to move up the value chain? And with companies drawing up plans for a future where AI and automation play an increasingly large role, will the business model of IT companies change, and what will be the impact of these changes on the labour market in India? The IT sector will need to navigate these turbulent times carefully.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hans India
a minute ago
- Hans India
Owaisi says fresh US tariffs on India will hurt Indian exporters, deter FDI, hit jobs hard
Hyderabad: AIMIM president Asaduddin Owaisi on Thursday said US President Donald Trump's decision to impose 50 per cent tariff on Indian goods will hurt Indian exporters, MSMEs, manufacturers and will disrupt supply chains, deter FDI, and hit jobs hard. A day after Trump imposed a penalty of another 25 per cent on India for buying Russian oil, Owaisi said Trump just slapped another 25 per cent tariff on India, taking it to 50 per cent, because 'we bought oil from Russia'. In a post on X, the Hyderabad MP said 'This isn't diplomacy, it's bullying by the buffoon-in-chief who clearly doesn't understand how global trade works". These tariffs will hurt Indian exporters, MSMEs, and manufacturers. It'll disrupt supply chains, deter FDI, and hit jobs hard. But why will Narendra Modi care? Where are those BJP muscle-flexers now?" the AIMIM chief asked. "Last time I'd asked if Modi ji would show his 56-inch chest when Trump imposed 56% tariffs. Trump stopped at 50%. Maybe he's scared of our non-biological PM? Was selling out our strategic autonomy worth filling your friends' billionaire coffers?" he further said. Trump on Wednesday slapped an additional 25 per cent tariff on goods coming from India as penalty for New Delhi's continued purchase of Russian oil, a move that is likely to hit sectors such as textiles, marine and leather exports hard. Trump signed an executive order - Addressing Threats to the US by the Government of the Russian Federation - imposing the additional tariff over and above the 25 per cent levy, which comes into effect from August 7. After this order, the total tariff on Indian goods, barring a small exemption list, will be 50 per cent.
Hans India
a minute ago
- Hans India
Sensex and Nifty Rebound After Sharp Fall on Hopes of India-US Trade Talks
On Thursday, the Indian stock market went down in the morning, with both the Sensex and the Nifty nosediving. Sensex fell by more than 700 points but later went up and closed at 80,623. Nifty also went down by over 200 points but ended above 24,500. Experts say the market improved because people are hopeful that India and the US will have trade talks soon.
Fashion Value Chain
a minute ago
- Fashion Value Chain
RBI Hits Pause on Rate Cut at 5.5%: Real Estate Set to Gain from Stable EMIs and Festive Demand
In a move widely anticipated by market watchers, the Reserve Bank of India has chosen to maintain the repo rate at 5.5%, following a cumulative 100 bps reduction over the past three Monetary Policy Committee (MPC) meetings. For the real estate sector, this pause reinforces a climate of stability, keeping home loan EMIs unchanged and encouraging end-user confidence. With the festive season approaching and earlier rate cuts still transmitting into the system, developers look forward to seizing the opportunity to drive sales through flexible payment plans and festive incentives. A further cut in the coming quarters, if macroeconomic conditions permit, could act as an additional trigger for housing demand. RBI Holds Repo Rate Steady at 5.5% Mr Manoj Gaur, CMD, Gaurs Group, says, 'This status quo reflects a prudent and laudable step by the RBI, especially in light of current international dynamics, including the impact of the Trump Tariff. With inflation significantly below the RBI's target, the decision will definitely boost the economy and impart positive sentiment to the real estate sector, particularly at the onset of the festive season, a critical period for housing demand. We believe this consistency in policy will help strengthen buyer confidence and stimulate activity across the real estate landscape. It also enables developers to plan ahead with greater clarity, especially for integrated and long-term projects.' Deepak Kapoor, Director, Gulshan Group, says, 'The two successive rate cuts resulting in a total reduction of 100 bps over the last six months, the RBIs stance to keep the repo rate steady at 5.5% is as per the realty sectors expectations. The move aligns with the central bank's cautious stance against the backdrop of global economic volatility. It is also noteworthy that the previous rate cuts significantly bolstered housing demand, with Tier-I cities recording residential sales worth Rs. 3.6 lakh crore in just the first half of 2025. Even though a slight reduction could have further fueled this growth, particularly benefiting affordable and mid-segment homebuyers. We look forward to a possible rate cut in the festive season as this would provide a timely push to housing demand, especially for first-time buyers and budget-conscious investors.' Adish Oswal, Chairman, Oswal Group, says, 'The RBI's decision to hold the repo rate steady at 5.5% reinforces economic stability while continuing to support the housing sector. The cumulative 1% reduction since February has already improved liquidity, enabling developers to fast-track launches and project deliveries. Meanwhile, the firm reductions in home loan rates are gradually boosting affordability, especially for first-time buyers. Together, these factors are expected to fuel fresh momentum in the real estate market and pave the way for sustained growth in the months ahead.' Sandeep Chhillar, Founder and Chairman, Landmark Group, says, 'The RBI sustaining the status quo marks a strong pro-growth signal and undoubtedly benefits the real estate sector. With home loan rates likely to fall further, affordability will improve, especially for first-time homebuyers. This move is expected to reignite demand, sustain buyer interest, and create a favorable environment for continued growth across the housing market.' Gurpal Singh Chawla, Managing Director, TREVOC Group, says, 'The announcement by the RBI to hit the pause button after a 100-bps rate cut in the last 6 months will bring cheers to the sector. At 5.50% the home loan continues to be affordable, and given the fact that the festive season is merely two months away, it will boost the markets prospects and lead to the real estate sectors growth.' Mr. Sanchit Bhutani, Managing Director, Group 108, says, 'As anticipated, the RBI's decision to maintain the status quo and keep the stance neutral signals continued confidence in India's economic growth story. This decisive move is set to unlock greater capital inflows, especially into high-impact sectors like real estate. Notably, the commercial segment is seeing renewed traction. This would allow ongoing projects to proceed without repricing risks. For occupiers and developers, predictability in the financial environment signifies stability and is always welcome.' Pankaj Jain, Founder & CMD, SPJ Group, says, 'In the midst of global economic uncertainties and recent tariff escalations, the RBI's decision to maintain the repo rate at 5.5% signals a measured and prudent approach to sustaining economic momentum. While a rate cut would have further boosted home loan affordability, the current stability still bodes well for the real estate sector-especially luxury housing, where demand remains robust. With borrowing costs steady, both end-users and investors can plan confidently, and developers are likely to continue exploring untapped micro-markets. This move reinforces policy consistency and supports ongoing recovery across the sector while contributing to broader macroeconomic resilience.' Sanjay Sharma, Director, SKA Group, says the RBI's decision to keep the repo rate unchanged at 5.5% injects optimism amid economic uncertainty. Setting a positive tone for the real estate sector, this will continue to ease the homebuying process, enhancing home loan affordability and supporting demand across the segments. We see this announcement as a positive push toward a broader recovery in real estate and the economy at large. Saurabh Saharan, Group Managing Director, HCBS Developments, says, 'The RBI's decision to hold the repo rate steady supports buyer confidence and keeps home loan EMIs stable. In Gurugram, demand remains strong, particularly in the mid and premium segments. While the recently proposed circle rate hikes may impact pricing in select pockets, overall market sentiment is upbeat and growth momentum continues. Stable rates will further drive residential demand and encourage developers to bring new projects aligned with evolving buyer preferences.' Ajay Tyagi, Chief Sales Officer, Better Choice Realtors, says, 'Given global economic uncertainties, the RBI keeping the repo rate at 5.5% sends a strong message of authorities being considerate towards real estate. This move will encourage borrowing, prompting more individuals to invest in property purchases and driving demand in the housing sector, especially amid the recently imposed U.S. tariffs.'
