AI is changing the rules of recruitment
While India's job market is expanding, it's evolving too. Will the companies manage to match the pace of change?
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Last Updated: Nov 06, 2025, 16:01 IST11 min
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Tata Consultancy Services (TCS) has acquired a new superscript, choosing tcsAI as the epithet for its journey of transformation to become the “world’s largest AI-led technology services company”.
On October 9, during its earnings conference call with analysts for the quarter and half year ended September 30, India’s largest software company listed “five pillars” on which its investments are currently focussed. One of them is tcsAI. Of the other four, three have AI, or artificial intelligence, in their name. These are: “redefining all services in a ‘human + AI services model’”, “making AI real for clients”, and “AI ecosystem play”.
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The fifth, which does not have AI in its name, is getting as much attention, if not more, because of the current context. This pillar is called “building a future-ready talent model”. Elaborating on this, K Krithivasan, CEO of TCS, said during the call: “We are investing in future-ready skills, embracing new ways of working, and recruiting top talent locally in the markets we operate in.”
Echoes of this statement can be heard in the debate about AI’s impact on manpower, especially in technology industries. “The Indian IT sector is facing a gradual workforce shift due to AI, not sudden layoffs, as companies balance efficiency with reskilling. IT companies have not yet made AI-related mass layoffs but have slowed hiring and made selective cuts based on re-skillability,” says Sangeeta Gupta, senior vice president and chief strategy officer at Nasscom, the industry body.
Mass hiring to specialists
In July, TCS said it would lay off about 2 percent of its employees, or 12,261 people, most of them at the middle or senior levels. So far it has laid off 1 percent.Kunnumal is not the only tech CHRO under the kind of scrutiny usually reserved for finance or marketing heads, or CEOs, thanks to the era-defining force called AI. Notice how everyone is responding to it.
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On the one hand, the Indian government has proposed rules to make sure all AI-generated content on social media is labelled as such, while on the other, Paul Schrader, the writer of fabled Hollywood movies such as Taxi Driver and Raging Bull says he has the perfect script to make an all-AI movie. In between, everything from manufacturing and health care to travel bookings are getting transformed with an infusion of AI.
As it looks increasingly inevitable that AI will change the way we live and work, its impact on the workforce has become a subject of intense analysis across industries, but more so in the world of technology, where organisations have understandably been the first to embrace AI. Indian IT companies find themselves at the centre of this debate. Which is hardly surprising, given that they employ nearly 5.8 million people (as of March 2025) and contribute 7 percent of the country’s gross domestic product (GDP), which is the total value of all goods and services produced. Nearly all this employment is white-collar, made up of a multitude that is vociferous, even if not all of them would step out to vote.
Gloomy predictions say nearly half a million of them may be in danger of being laid off in two to three years because of a gap between what they have to offer and what clients would now be needing. A majority of them could be mid-career people, as seen in the case of the TCS layoffs.
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“The Indian IT sector is decisively pivoting from volume hiring to precision, or value, hiring,” says Milind Shah, managing director, Randstad Digital India, a tech talent firm. That would mean a shift from mass campus recruitment for generalist roles to hiring for specialised skills. “This trend,” he says, “is driven by automation rendering many Level-1 and Level-2 tasks redundant.”
In the place of jobs that become obsolete, hybrid roles are emerging, such as of AI translators, data governance leads, prompt engineers, and algorithm auditors. “These roles blend human insight with machine capability. The new value lies in judgment, understanding the context, designing guardrails, and ensuring technology aligns with purpose,” says Husain Tinwala, president, upGrad Rekrut, a staffing and recruitment outfit.
Richard Lobo, chief people officer at Tech Mahindra, says the company over the last three years has ramped up hiring for AI-native roles (machine learning operations, large language model engineers, data scientists, etc) while upskilling its people to work with AI. “In the long term, AI will augment human judgment by reducing routine hires, investing more in high-impact domain + AI capabilities, and firmly emphasising ethical and trusted AI practices,” Lobo says in an email.
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TCS, Infosys, Wipro, HCLTech, and LTIMindtree were not able to speak directly with Forbes India for this story. That can be attributed to a litany of reasons such as the busy earnings season calendar and festival holidays. A multinational firm agreed to speak on the condition that layoffs will not be a topic of discussion. The meeting had to be politely deferred to a time when layoffs can come back as a topic.
Meanwhile, the chatter in tech circles is that everything is being looked upon afresh through the AI lens, not just the operations but also the fundamentals of the business model. The hour-based billing system is being re-examined, given the productivity increase made possible by AI, and there is talk of an outcome-based approach and co-creation with clients.
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“These are initial days, but we are starting to make commitments on outcome-based projects with select customers. And there are learnings, and this is a model that we see increasingly evolving and becoming more mainstream with customers,” Aarthi Subramanian, COO of TCS, said during the earnings call.
At the earnings conference call of Infosys on October 16, one heard the term “forward-deployed engineers”, which, CEO Salil Parekh said, were people the company had been using across its AI landscape for some time. Explaining this further, chief delivery officer Satish HC said: “I guess the opportunity with AI is that we are developing a new breed of services stack or software stack for our clients. So, this is reimagining of either how we run business or how we even deliver services... the onus is on co-creation with our clients… We see that there will be a lot more need for forward-deployed engineers to work with our clients to drive this co-creation of the new breed of software stack.”
Sign of things to come?
Repetitive, low-context, and tedious data processing tasks are rapidly becoming redundant. This includes entry-level code maintenance, routine system monitoring, and certain back-office functions within BPOs and customer support. Here, “AI chatbots are proving highly efficient,” says Shah of Randstad.Advertisement
The headcount at TCS in Q2FY26, as reported by Forbes India earlier, is at its lowest in 14 quarters—about 20,000 below the level in the preceding quarter. In parallel, the company has taken a bold approach to AI. It has not only formed partnerships with other companies, such as the deep-tech kind, but is also investing in building AI infrastructure. Earlier this year, it announced the launch of TCS SovereignSecure Cloud and is setting up a new subsidiary to build a sovereign AI data centre with a capacity of 1 GW at an estimated investment of $6.5 billion during the next five to seven years. “Our journey to becoming an AI-led organisation is anchored in bold transformation,” Krithivasan said during the conference call.
Others appear to be aligning AI with their existing services. But how long will it be before others, too, begin to realise that they might need either fewer people or a set of people with new, different skills? Globally, this realisation is dawning rapidly.
Also Read: TCS: Layoffs are a low-hanging fruit
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The New York Times reported on October 21 that Amazon, the second largest employer in the United States, could possibly replace more than half a million jobs with robots. This would include people it can avoid hiring in the US because of automation. An Amazon spokesperson told NYT the documents viewed by the newspaper were incomplete and did not represent the company’s overall hiring strategy.
At some other big names in the tech world, there is heightened anxiety that layoffs have either started or are around the corner. This includes Meta, the parent company of Facebook, Instagram and WhatsApp. Google, too, gets mentioned in these reports. Salesforce and Accenture have announced job cuts in the midst of making major advancements in AI.
Anti-AI play?
Seattle, where Amazon has its headquarters, is a long way away from Bengaluru, which is home to some of the biggest Indian IT companies. And not only in the geographical distance.“India is being slowly positioned as a global anti-AI play,” said HSBC Global Investment Research in a report dated October 13—a conclusion its team arrived at after meeting a number of global investors. “Global AI exuberance is palpable, and it seems India, at this stage, is at a distinct disadvantage in the AI revolution,” it said.
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The report lists three areas where India is at a disadvantage. One, both growth and hiring have slowed in India’s IT sector. Two, the medium- to long-term impact of AI on India’s services sector is a concern for investors, especially because India’s reliance on services—55 percent of its GDP is services—is higher than the global average. The third area of concern is the near-term impact of FII outflows from India to AI destinations.
However, Tinwala of upGrad Rekrut says Indian IT majors do not get enough credit for how fast they are evolving, embedding AI across delivery functions, retraining large sections of their workforce, and building their own digital platforms to capture years of process intelligence. “In many cases, we see them move beyond traditional outsourcing to ‘intelligence sourcing’, where delivery is not just about cost and speed, but also about co-owning transformation outcomes with clients. This marks a fundamental shift from being service providers to becoming strategic transformation partners,” he says.
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Course correction
Indeed, TCS says it is creating personalised learning pathways using AI for its employees and working with academia for skills needed for next-gen tech and human-AI collaboration. It has made available AI tools and environments to its employees to learn and embed AI in their work. “We now have close to 160,000 associates at higher-order AI skills. Our leaders are walking the talk—over 10,000 of our sales and delivery leaders have gone through an immersive and hands-on AI Dojo programme,” Subramanian, its COO, said.HCLTech has become the first Indian IT company to report its standalone AI revenue, which came in at more than $100 million in Q2FY26—about 3 percent of its revenue. CEO C Vijayakumar spoke at length on HCLTech’s AI strategy and progress during the company’s earnings conference call on October 13. “Transformation of our talent and onboarding new talent to enhance our capabilities is central to our strategy,” he said.
Three days later, during Infosys’ earnings call, Satish said about 90 percent of the company’s employees were equipped to collaborate with and leverage AI tools in their daily work. The next tier, he said, was of the AI builders. “Ten percent of our top technology talent pool are engaged in highly innovative projects and solution building with AI. The top tier, the AI masters and amongst them the forward-deployed engineers, are driving the AI momentum for our clients by solving the tough industry challenges,” he said.
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Meanwhile, the clients of IT companies are looking to benefit from AI by demanding higher cost optimisation, in addition to speed and efficiency, from their vendors. At Wipro’s earnings conference call, CEO Srini Pallia acknowledged this. “And we see that as an opportunity for us,” he said.
Infosys CEO Parekh, too, talked about costs. “Today, with the economic environment where it is, there is a lot of interest and focus on cost reduction, and that is where we see a lot of the initial work coming in,” he said.
Interestingly, in a country that produces engineers by the truckloads, the AI drive is seen as a positive force for tier 2 and 3 cities and towns. “Yes, and this is one of the most promising shifts in the industry. With hybrid work and cloud infrastructure, smaller cities are now credible delivery hubs,” says Tinwala of upGrad Rekrut, which has seen a 37 percent increase in placement requests from tier 2 and 3 regions over the past 12 months, driven by a growing demand for AI engineers, data analysts, and automation specialists. This, points out Shah of Randstad, is also driven by the global capability centres being set up outside the big cities.
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Even HSBC, whose report is not wildly ecstatic about the impact of AI on Indian IT in the near term, says things look better in the medium to long term.
First Published: Nov 06, 2025, 16:22
Subscribe NowNaini Thaker is an Assistant Editor at Forbes India, where she has been reporting and writing for over seven years. Her editorial focus spans technology, startups, pharmaceuticals, and manufacturing.
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