Indian IT Sector Layoffs: Job Pressures and In-Demand Skills
At a time when global layoffs in the IT sector are frequent, the Indian IT job market is experiencing a structural shift. New roles are emerging, while traditional positions are becoming obsolete due to advancements in artificial intelligence. Hiring is expected to remain subdued in FY27, with companies selectively backfilling attrition rather than replacing positions on a one-for-one basis.
Layoff Trends So Far This Year
Large-scale layoffs appear to be diminishing, but targeted exits continue as companies restructure. Neeti Sharma, CEO of TeamLease Digital, noted that the top five IT companies reduced their combined headcount by nearly 7,000 in FY26, a stark contrast to the addition of around 12,700 in FY25. While overall employment in the industry grew by approximately 1.35 lakh in FY26, this growth is only marginally higher than the previous year.
Anil Ethanur, Co-founder of Xpheno, observed that the number of enterprises conducting layoffs has decreased. He explained that the high-volume layoffs seen in 2022 and 2023 were necessary to address excess capacity created during the post-pandemic hiring boom. Current efforts to optimize headcounts focus on increasing efficiency rather than merely downsizing.
Which Jobs Are Facing the Pressure?
Roles that involve repetitive, rules-based tasks are under the most pressure, particularly those that AI can automate. This includes entry-level coding, routine testing, and basic application maintenance. Milind Shah, Managing Director of Randstad Digital India, emphasized that the focus is shifting from job loss to the changing skill requirements within those roles.
Neeti Sharma noted that some middle-management positions are being redesigned, indicating a broader trend of evolving job content rather than just diminishing roles. Junior and mid-level engineers are particularly vulnerable to AI’s impact, but this risk extends to other low-complexity functions across various levels.
Attrition Trends: Where Are People Going?
Voluntary attrition has normalized significantly from the post-pandemic peak, with current rates at large IT services companies around 13–14%. Neeti Sharma highlighted that talent with skills in AI, cloud, and cybersecurity continues to move, while routine roles face more restructuring. Employee expectations regarding career growth and flexibility are increasingly driving attrition.
Randstad’s research indicates that 40% of IT workers globally have left jobs due to a lack of flexibility, while 43% cited limited career advancement opportunities. In India, employees are prioritizing career growth, often considering job changes even when satisfied with their current roles.
Which Skills Are in Demand?
The shift in the job market is leading to a focus on capability-led hiring rather than volume-led hiring. Milind Shah stated that demand is rising for skills in AI/ML, cloud, data science, cybersecurity, and automation. Nearly nine in ten Indian employees recognize the importance of reskilling, indicating a shift in focus from headcount to the skills necessary for future growth.
Professionals with expertise in AI, cloud, data, and digital engineering will be increasingly sought after. The ability to combine technical knowledge with problem-solving and client-facing skills is becoming essential as continuous learning and reskilling take center stage in navigating this transition.
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