TALENT HUNT, POWERED BY AI: THE LINEARITY BETWEEN HEADCOUNT AND REVENUES AT IT SERVICES FIRMS NO LONGER HOLDS. WITH THE AI DISRUPTION, TRIMMING OBSOLETE ROLES TO FOCUS ON NEXT-GEN TECHNOLOGY TALENT IS THE NEW NORM.

DAYS AFTER POSTING a third straight quarter of decline in revenues, Tata Consultancy Services (TCS) announced in early August that it would reduce its workforce by 2% to “future-proof” the company. This means that nearly 12,000 middle- and senior-level executives will be rendered jobless by the end of FY26 at India’s largest IT services firm with a headcount of around 613,000 employees. The move, a harbinger of what lies ahead, has jolted the sector.

- BY RUKMINI RAO

Back in 2022, technology adoption accelerated globally, due to the pandemic. And IT firms responded with a hiring spree. India’s Top 3 IT firms recruited more than 70,000 people in FY21. But hiring as well as attrition rates have moderated over the past couple of years. The headcount at TCS rose from 606,331 in Q1FY23 to 613,069 in Q1FY26, while at HCLTech it inched up from 210,966 to 223,151. Attrition, however, dropped from 19.7% to 13.8% at TCS and from 23.8% to 12.8% at HCLTech. Infosys saw its workforce decline from 335,186 to 323,788 over the same period.

In FY25, on the back of slower growth, especially for large firms, and weighed down by global macro uncertainties for FY26, many of them staggered the onboarding of freshers. Yet, the net addition in the overall headcount of the Top 5 firms, barring Infosys and Wipro, surpasses the Covid levels.

Structural shift

The current recalibration also stems from a structural shift in the industry. Muthu Kumaran, operating partner and head of India operations at tech investment platform Recognize, anticipates an AI-driven 360° disruption that will challenge the identity and existence of IT services firms while redefining how they grow, sell, and work. Yesterday's executives may become tomorrow's laggards, and new players may rise to redefine the future of IT services.”