Costly middle layer under fire in IT firms’ cost-cutting drive: Report

The churn is being linked to pandemic-era over-hiring in FY22, when IT firms brought in costly mid- to senior-level talent to meet surging demand.

Mid- and senior-level professionals in India’s top IT services firms are facing unprecedented layoffs as slowing growth and rapid adoption of artificial intelligence (AI), including agentic AI, push companies to trim costly management layers.

According to data from staffing firm Xpheno cited in a Business Standard report, more than 7,700 employees with over 15 years’ experience exited the seven largest IT services players, TCS, Infosys, Wipro, HCLTech, Tech Mahindra, Cognizant, and LTIMindtree, in the past year. To be noted, this is nearly 4 percent of their senior talent pool.

Nearly half moved to global capability centres (GCCs), while others joined rival IT firms or non-tech roles, it has been learnt from the report.

On July 27, the shake-up gained further attention when Tata Consultancy Services (TCS) announced plans to cut 12,000 mid- and senior-level jobs in FY26 to become “more agile” amid technological disruption. The job cuts, representing about 2 percent of its 6.13 lakh workforce, will impact employees globally across functions.

The churn is being linked to pandemic-era over-hiring in FY22, when IT firms brought in costly mid- to senior-level talent to meet surging demand. “We are now correcting that,” according to a senior executive at a large IT services company cited in the report.

Analysts cited in the report say that senior managers are often slower to adapt to AI-driven workflows. This is resulting in the companies favouring younger talent.

Since FY16, India’s top five IT firms have generated Rs 8.9 trillion in cash profits but reinvested only Rs 1.2 trillion in expansion, according to the report.