India’s IT services industry entered 2025 expecting a slow demand recovery, but it instead found itself pulled into a series of controversies, some structural, some cultural, some self-inflicted.
From layoffs and bench-policy conflicts to tax rulings and workplace safety lapses, the sector saw unprecedented public and regulatory attention.
For an industry long known for tight control over narrative, 2025 underscored a shift: employee groups became more vocal, unions gained visibility, and courts increasingly shaped operational norms.
Below is a roundup of the 10 defining controversies that dominated the year.
TCS’s 12,000-Job Reduction and the “Forced Exit” Debate
TCS’s announcement of a roughly 2% workforce reduction, amounting to around 12,000 roles, triggered the year’s most discussed controversy. The move contradicted earlier optimistic hiring projections and immediately fueled allegations by employee unions that the cuts were being executed through “forced resignations.”
Though TCS maintained the exits were part of a strategic workforce recalibration, the opacity around criteria, timelines, and conversations with affected employees drew sustained criticism. The episode marked the most severe public backlash TCS had faced since the 2023 recruitment-bribery controversy.
The TCS “35-Day Bench” Rule Sparks Coercion Complaints
In a second major flashpoint, TCS introduced a rule limiting the bench period to 35 days. Employees alleged that this effectively pressured them to resign if they couldn’t secure a project quickly. Online forums exploded with testimonies describing abrupt calls, rushed appraisals, and unclear redeployment pathways.
NITES, the employee union, escalated the matter to state labour authorities. TCS defended the rule as a utilisation initiative, but the controversy cemented a narrative of tightening internal controls amid weakened demand.
“Silent Layoffs” and the 50,000-Jobs-On-the-Line Narrative
Across the top IT firms, hiring stagnated and net headcount declined, feeding a broader storyline of “silent layoffs.” Analysts estimated that as many as 50,000 roles across the sector were at risk due to a combination of low deal conversion, bench reduction, automation, and project rationalisation.
Even companies that avoided formal layoffs faced accusations of performance-linked exits, project cancellations without redeployment, and shrinking fresher intake. This sector-wide sentiment set the backdrop against which all other controversies unfolded.
The R&D Deficit: Reliance on Headcount-Led Revenue Under Spotlight
A long-standing structural criticism intensified in 2025: Indian IT’s extremely low R&D spending, typically 0.5% or less of revenue, far below global tech benchmarks, combined with a business model still heavily dependent on linear headcount growth. The GenAI wave magnified scrutiny. Despite large AI announcements, most spending went into partnerships, implementation training, and Proof of Concepts rather than proprietary research or platform development.
Investors criticised the absence of nonlinear growth engines, engineers raised concerns about shallow innovation roles, and policymakers flagged the sector’s limited contribution to India’s long-term tech IP base. As automation and AI began decoupling revenue from headcount, the weaknesses of the legacy model became more visible than ever.
Wipro’s Legal Setback Over a “Defamatory” Relieving Letter
A Delhi High Court order became a governance flashpoint: Wipro was directed to issue a clean correcting letter and pay damages to a former employee because the original relieving document allegedly implied misconduct.
The ruling moved beyond individual relief; it created a precedent around how exit documentation must be worded. For an industry heavily dependent on BGV processes and strict reference checks, the case prompted internal audits across companies and revived older concerns about opaque exit practices.
Infosys Closes a Long-Running GST/RCM Investigation
Infosys finally saw formal closure of the multi-year DGGI investigation regarding IGST liabilities on services rendered by its overseas branches. Though the closure itself was positive, the episode reignited debate over the compliance complexity facing Indian IT firms with global delivery centres.
For much of the year, the industry tracked the case closely because an adverse ruling could have triggered large backdated tax liabilities for multiple firms. The resolution stabilised sentiment, but highlighted lingering tax ambiguities in export-linked service structures.
Tech Mahindra–Satyam Legacy Tax Case Returns to Spotlight
A Telangana High Court ruling directing a fresh assessment in the long-running Satyam Computer-related tax matter brought an old controversy back into the spotlight. Though this was a legacy issue inherited through Tech Mahindra’s acquisition of Satyam over a decade ago, the renewed scrutiny sparked discussions about integration-risk management and the long tail of corporate fraud cases. It reminded the sector that past scandals can re-emerge unexpectedly, especially when tax or compliance reassessments are involved.
Infosys Campus Voyeurism Case Raises Workplace Safety Concerns
In a serious workplace-safety controversy, an Infosys employee in Bengaluru was arrested for allegedly filming a colleague inside a women’s washroom. Charged under the IT Act and provisions for voyeurism, the case prompted strong internal and public reactions. For a company celebrated for its campus culture, the incident initiated questions around surveillance blind spots, incident escalation processes, and the adequacy of preventive infrastructure.
It also pushed other IT firms to review physical-security protocols on large campuses.
Kochi Infopark Firm Faces Sexual-Harassment and Extortion Allegations
In Kerala’s Infopark, a sexual-harassment FIR against a CEO, accompanied by a counter-claim of extortion, triggered a tense and widely reported dispute. The case placed a sharp spotlight on how POSH (Prevention of Sexual Harassment) processes were being executed, audited, and communicated in mid-sized IT companies. Unlike larger IT majors, midsize and emerging players often lack well-formalised committees or documentation practices, and this incident fuelled concerns about uneven compliance maturity across the sector.
L&T Chairman’s “90-Hour Work Week” Comment Backfires on LTIMindtree
A resurfaced video of L&T’s chairman S N Subrahmanyan advocating that India’s youth should work 70–90 hours a week ignited a nationwide backlash. Though the remark was not specifically about LTIMindtree, the IT subsidiary was pulled into the debate by association. Employees and unions questioned whether such cultural expectations were influencing project pressures and delivery timelines.
HR clarifications followed, but the controversy quickly evolved into a broader discussion about burnout, unrealistic client commitments, and the sustainability of India’s IT talent model.
