For decades, expansion in India’s IT services industry followed a simple rule: more deals meant more people. Campus hiring, especially of fresh graduates, was widely seen as a signal of future growth. That long-standing model is now being reworked as artificial intelligence begins to reshape how IT services are delivered.
In recent quarterly earnings calls, leading IT firms highlighted a strong rise in AI-led projects and deal pipelines, with momentum expected to continue through 2026. At the same time, companies spoke about reskilling existing employees, redeploying talent internally and being cautious with new hiring. Together, these signals point to a clear shift away from the manpower-heavy growth model.
The changing pattern is already visible in workforce decisions. In mid-2025, Tata Consultancy Services announced a restructuring exercise. This quarter, the company released around 1,800 employees who could not be redeployed internally.
“We continue to hire and seek top talent, both from the lateral market and campuses,” Sudeep Kunnumal, Vice President and CHRO at TCS, said during a post-earnings analyst call. “We continue to look for people with deployment into future roles. Wherever we are not finding success in re-deployment, that is where we are releasing the workforce.”
A recent sector report from a brokerage firm noted that this shift is already reflected in hiring trends. “This AI-driven shift is directly impacting jobs, which is visible in the muted hiring across the sector over the last 8–10 quarters,” the report said. “At the same time, AI is unlocking new layers of hyper-specialisation that are beginning to define the future of work in technology services.”
Peers are seeing similar trends. Tech Mahindra reported a fall in headcount during the quarter, even as attrition stabilised and deal volumes improved. CEO Mohit Joshi said the company is choosing redeployment over replacement. “Thanks to our new software infrastructure, we have much better visibility of individual-level talent and where they can be redeployed,” he said.
Hiring priorities are also shifting. TCS said it will focus on experienced talent in cybersecurity, enterprise solutions, cloud, AI and data, while also onboarding AI-native fresh graduates. “We hired a significant number of AI-native fresh graduates,” Kunnumal said.
Yet, demand for entry-level talent remains weak. “The demand for entry-level and fresher talent has been low since 2023,” said Kamal Karanth of staffing firm Xpheno. He added that current active demand across sectors is under 50,000, with less than one-third coming from technology roles.
Even when campus hiring resumes, volumes are lower. Wipro said it would return to campuses after a brief pause, while Infosys confirmed it has onboarded 18,000 of the 20,000 freshers planned for the fiscal year.
Beyond hiring, AI is changing service economics. Infosys CEO Salil Parekh said delivery models are evolving. “We will have our people working and these software agents, which make the overall economics for the client much better,” he told analysts. Over time, this is expected to influence operating margins.
For now, reskilling is the dominant strategy. TCS has trained over 217,000 of its 582,163 employees in advanced AI skills. HCL Technologies has trained more than 38,000 employees on GenAI and over 600 on responsible AI. Xpheno data shows that while technology roles still drive demand, less than a quarter are AI-specific. “This clearly points to a focused internal upskilling and reskilling process in play,” Karanth said.
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