The top five Indian IT companies are shrinking, quietly, and calling it everything except what it is—restructuring, AI-driven transformation, workforce optimisation, or organisational agility. But all of these eventually mean the same—inevitable layoffs. And the signs are already there.
TCS alone lost over 19,700 employees in Q2 FY26, marking its largest quarterly headcount decline ever. Infosys, HCLTech, Wipro, and Tech Mahindra added people sequentially, but barely enough to offset the numbers TCS let go.
The net addition across all five firms was just 2,686 employees. Compared to H1FY25, hiring has plunged 79.25%, according to a report by Moneycontrol.
The narrative is being dressed up as agility, skill realignment, and organisational shifts. TCS chief HR officer, Sudeep Kunnumal told Mint that only about 1% of its workforce—roughly 6,000 people—were released in a “restructuring exercise.”
For TCS, the numbers tell two stories. While the company hired 18,500 people in the July-September quarter, the headcount fell by 19,755. The discrepancy isn’t lost on industry watchers.
Industry-wide Slowdown
Across the board, hiring for freshers is slowing. TCS plans to hire more than 42,000 freshers for the year, Infosys has already added 12,000, HCLTech has added close to 7,180, Wipro plans 10,000–12,000, and Tech Mahindra is still watching demand before committing.
Tech Mahindra, for example, saw its headcount fall to 1,52,714, down 1,559 employees from a year ago, as the company reported IT attrition rate of 12.8% over the last 12-month period. CEO Mohit Joshi said during the Q2 FY26 press conference that there is no sharp cut in the headcount and it is all about restructuring.
“We obviously continue hiring where we see opportunities and in portions of our business where we are seeing growth,” he said. “This is a marginal reduction in the workforce that you’ve seen this quarter. It’s not a meaningful reduction.”
The caution is visible in hiring trends. TCS and Tech Mahindra’s approach mirrors a broader shift in the industry: moving from hire-and-train to train-and-hire.
Wipro, for instance, is working with campuses to align curriculum with project needs, onboarding only when deployment is imminent. The company already started restructuring its business lines in March this year to align with client needs.
HCLTech’s chief people officer Ramachandran Sundararajan pointed out in the Q2 earnings call that revenue per employee (RPE) is rising even as headcount growth is muted, highlighting a preference for productivity over sheer numbers. But the firm is also restructuring its workforce to address “skill location mismatch”, as CEO C Vijayakumar had termed the exercise in the last quarter.
Krishna Vij, former VP of hiring at TeamLease Digital, had earlier told AIM that muted revenue growth and sluggish demand recovery will likely make large-scale fresher hiring a challenging exercise for Indian IT companies in FY26.
Automation has become a direct lever for RPE growth. As per Greyhound’s CIO Pulse 2025 report, a European bank—a client of Infosys—embedded AI in its trade finance operations, lifting contract value by 22% YoY while reducing staffing needs. The deal boosted RPE but required onshore compliance-heavy delivery, which dampened margins.
For all firms, attrition is stabilising after years of volatility. Q2 FY26 rates for the top four firms ranged from 12.6% at HCLTech to 14.9% at Wipro, the lowest in nearly five years. The stabilisation suggests that companies are learning to manage talent pipelines rather than chasing numbers.
Is Generative AI the Reason?
This isn’t just about attrition or hiring freezes. It’s about AI.
Generative AI is reducing the need for large teams of junior developers. HCLTech CEO Vijayakumar had described it earlier, saying that the changes AI is assuring are very different, “and we need to be more proactive to even categorise our revenues to create completely new businesses.”
At HCLTech, a $1 billion technology transformation project for a financial client was cut from five years to three-and-a-half years through AI-driven efficiencies. That’s fewer hours, fewer people, same revenue.
TCS says AI hasn’t impacted fresher hiring. The company reports over 114,000 employees with higher-order AI skills, but it won’t clarify how this translates into headcount reduction. Infosys focuses on its Topaz platform to automate service delivery, reducing the need for volume hiring cycles.
Wipro’s AI-first strategy ties training directly to deployment readiness. HCLTech is reskilling its workforce with AI Force, improving revenue per employee even with muted hiring.
The story is already playing out globally. Microsoft laid off 15,000 people, openly attributing it to AI-driven efficiency. CEO Satya Nadella acknowledged the human toll but framed it as a necessary trade-off for leadership in AI. Google quietly reduced staff, urging employees to leverage AI tools for productivity, achieving similar workforce impact without explicitly saying so.
IT firms here have historically survived on scale. More employees meant more projects, more revenue, and more growth. That model is under threat. AI fundamentally changes how services are delivered. Bench strength is being squeezed and projects are moving faster.
Indian IT is moving from a scale-driven model to an AI-optimised model, and layoffs framed as “restructuring” are an inevitable consequence.
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