The Indian IT services model has finally begun to falter... or has it?

Layoffs mustn't be confused with the sector's health as the business is adapting to an AI shift in a display of tech resilience

- DEVINA MEHRA

Recently, there has been a tendency to classify the Indian information technology (IT) services sector as heading downhill. This is happening as artificial intelligence (AI) and automation reshape the global technological landscape. The data points cited are to do with lower employee intake, stagnating salaries and now, horror of horrors, layoffs.

The problem? Many conflate the outlook for the industry with the future of employment provided by these companies, whereas these are two completely different things.

For context, the Indian IT services sector, led by giants like Tata Consultancy Services (TCS), Infosys and Wipro, has been a prolific job creator since the 1990s. In the late 90s, I remember writing a First Global research report that mentioned that these companies would become the biggest employers in the country. People thought we were smoking something, as each of these had less than 10,000 employees at the time and India's largest private sector employer was Tata Steel, with more than 65,000 people.

But we know how that story panned out. The voracious appetite of the sector for recruits meant that not just computer science graduates, but even mechanical and civil engineers were absorbed by the hundreds of thousands into this giant machine. Besides its direct hiring, the IT industry fuelled employment and businesses around it, thanks to demand for nannies, drivers and guards all the way to a boom in ancillary sectors like real estate, retail, education and food delivery as IT hubs in cities like Bengaluru, Hyderabad and Pune flourished.