Why Indian IT firms are cutting jobs even as revenue continues to grow

Even as top line growth holds steady, IT giants such as TCS, Infosys and Wipro are shedding jobs, signalling a shift to automation, pyramid reset and legacy rationalisation

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Major Indian IT companies are reducing jobs or slowing hiring — even though their revenues are stable or increasing. In recent months, Tata Consultancy Services (TCS) announced a cut of about 2 per cent of its workforce (over 12,000 jobs), while Infosys has drastically slowed down fresher onboarding. Wipro is also trimming roles in a targeted manner. These trends point not to financial distress, but to a deeper change in strategy, as companies future-proof their workforce and delivery models.     

 

Number game: Workforce vs revenue

 

Despite these cuts, revenue growth has remained positive, albeit subdued. In Q1 FY26 (April-June 2025), TCS reported a 1.3 per cent rise in revenue to ₹63,437 crore, with net profit up by 5.9 per cent. Infosys saw 7.5 per cent revenue growth to ₹42,279 crore, while HCLTech outperformed peers with an 8.1 per cent increase.

 

TCS, Infosys, Wipro, and HCLTech have all reported modest year-on-year revenue growth in the latest quarter. However, these numbers have come along with shrinking or flat employee bases. For example:

 

- TCS reported one of its weakest first-quarter results since 2020 but still took the step to cut 2 per cent of its employees

- Infosys hired just 15,000 trainees in FY25 — a much lower number than previous years — and paused fresher onboarding while guiding for flat to 3 per cent revenue growth for FY26

- HCLTech also reported fewer net additions and has gone slow on recruitment

 

Because revenues are not dropping but hiring is, revenue per employee is rising across top IT majors. This marks a shift from the past, where headcount growth reliably matched business growth.        

 

What is driving the cuts?

 

-AI and automation are being embedded into core service delivery. TCS, Infosys, and HCLTech continue to invest aggressively in GenAI and automation platforms. As TCS’s CEO said, “We have been deploying AI at scale... ways of working are changing. We need to be future-ready and agile,” highlighting how AI-led productivity is offsetting the need for large-scale hiring, especially at lower rungs.

 

-Traditionally, IT firms operated on a pyramid model, hiring large numbers at the entry level and fewer at the senior level. Now, this is shifting. With automation handling more basic tasks, companies are shifting towards a more skills-focused structure, with implications for campus recruitment and entry-level jobs. Firms have made their training and screening tougher, resulting in higher rejection rates of fresher trainees at firms like Infosys.

 

How IT giants are responding

 

TCS:

- Cut 12,260 jobs (2 per cent of workforce)

-Framing layoffs as necessary for becoming "future-ready"

-The Ministry of Labour and Employment has asked TCS for a meeting with the chief labour commissioner in New Delhi on August 1 to address the delay in onboarding over 600 experienced professionals. The directive follows a complaint by the Nascent Information Technology Employees Senate (NITES), which alleged that TCS failed to honour job offers despite issuing offer letters and formal communication.

 

Infosys:

-Slow or flat hiring; pausing fresher onboarding.

-Layoffs especially among trainees who fail new, tougher assessments

 

What it means for the workforce

 

These moves mean a shrinking bench size and reduced fresher absorption. Hiring is now focused on niche talent in areas like AI, cloud, and cybersecurity. For those already on the payroll, constant reskilling is vital — even for mid-career roles.

 

Outlook: New rules of scale

 

Growth is no longer tied to expanding employee count. With the recent cuts, it now appears that IT firms are betting on quality over quantity, seeking to improve output per employee. This change puts pressure on engineering colleges, reduces fresher offers, and demands a new approach to talent development for the Indian IT sector.