Where are the jobs? IT, banking, financial services sectors witness slow hiring

The MSMEs are also recording an uptick in employment generation.

Amid mixed signals on economic activity, the outlook for India’s overall formal job market appears "steady". But industry estimates suggest the information technology (IT), and banking and financial services sectors may see a slower pace in hiring in the near term.

According to the latest Naukri Jobspeak report—which aggregates data from 100,000 clients—IT/software services recorded a 5 percent year-on-year decline in hiring in May, and banking/finance/broking service witnessed a 9 percent drop. The insurance sector, however, saw a 6 percent rise in hiring in the month, and real estate as well as oil and gas posted a 4-5 percent growth.

Analysts say major tech companies may not take on as many employees, mainly new hires, as they were doing in the past. One key factor is linked to external uncertainties that have reduced demand for export-oriented technical services and the second, more significant aspect relates to AI-related developments, which has shrunk the need for hiring first-timers.

"With AI-driven software development improving the efficiency of IT services, new fresher jobs are few and far between as most tech companies are in a wait-and-watch mode for US-linked discretionary spending to return," said Gaurav Parab, principal research analyst, Nelsonhall, an analytics and advisory firm with a focus on the BPO sector.

"This is not how it was a couple of years ago, and going forward with AI-backed development expected to exponentially increase, there is very less possibility of the trend being reversed," added Parab.

A human resources professional associated with the IT sector who didn’t wish to be identified told Moneycontrol: "Starting next year, or 2027, there could be a big layoff in the Indian IT sector, largely owing to integration of AI. Infosys, Cognizant, TCS, Accenture, etc., don’t need so many people anymore."

Globally, too, the IT sector is seeing mass retrenchment. As per 'Layoffs.fyi'—which tracks dismissals in the tech sector globally—in 2025, as many as 63,823 people have been let go so far by IT and related sector companies.

On banking and financial services, Karan Gupta, director, India Ratings and Research (Ind-Ra), said the sector is dealing with a shortage of skilled staff. "The problem there is of attrition, skilled people don’t stay. They move quickly," Gupta said.

Macro outlook

The finance ministry in its latest Monthly Economic Review (MER) bulletin said that the labour market indicators show "signs of stability", and that the outlook for hiring and employment "appears steady".

The MER stated the employment sub-indices of the Purchasing Managers' Index (PMI) indicate "strong employment" growth in the country. Data released on Tuesday backed the claim, as India’s manufacturing PMI for June zoomed to a 14-month high of 58.4 in June marked by improved trends in output and new orders, alongside a "record upturn" in employment.

The Periodic Labour Force Survey for May, however, showed that the unemployment rate rose to 5.6 percent from 5.1 percent in April, and the worker population ratio (WPR) eased a bit to 51.7 percent from 52.7 percent. In rural areas, the WPR declined to 54.1 percent in May from 55.4 percent in April, and in urban areas eased marginally by 5 basis points to 46.9 percent.

"These changes in the monthly indicators may be attributed to a combination of seasonal, academic, and labour market-related factors. In rural areas, employment shifted away from agriculture… This may be attributed to the end of the Rabi harvest season, leading to a downward shift in the number of workers," noted the MER.

MSMEs hold the fort

Micro, small and medium enterprises or MSMEs, which collectively are the largest employers, are also recording an uptick in employment generation, with official estimates now crossing the 28-crore mark. According to the Udhyam portal—the real-time data source on MSMEs—the total employment generated as on July 1, 2025, stood at 28.2 crore. In April, the figure was close to 27 crore, and in April of 2024, it was about 18.5 crore.

Sarvadnya Kulkarni, CEO, General Instruments Consortium, told Moneycontrol that despite external uncertainties around trade and tariffs, the company’s employment expansion plans remain firmly on track, with a projected 10-15 percent increase in headcount year-on-year, mainly in manufacturing, R&D and international sales. GIC is a leading manufacturer of industrial instruments based in Mumbai.

However, many MSMEs are heavily dependent on exports and have of late largely stalled hiring. Industry experts say that MSME exporters are under real pressure right now. "Some have seen export orders fall by as much as 50 percent over the last two years. Add to that the rising cost of compliance, tighter access to credit, geopolitical stress and higher input duties—especially in sectors like textiles and apparel—and it’s no surprise we’re seeing some layoffs," said Kartik Narayan, CEO, staffing, TeamLease Services.

Additionally, a labour-market expert on condition of anonymity said that the employment condition overall is not as rosy as it appears to be, especially since there is no clarity on the kind of jobs being created. "The real-wage growth has been low in recent months, indicating creation of substandard quality jobs," the person said.

According to Ind-Ra, the urban minimum real-wage growth was muted at 0.1 percent in April and 0.4 percent in May. "This shows construction workers working in urban areas stand on a weak footing," said Paras Jasrai, economist, Ind-Ra.