AI is Dismantling Both Big Tech and Indian IT Jobs—But Differently

Last week, two of the world’s most powerful technology companies moved in near-unison.

Meta sent an internal memo to every employee informing them that 10% of its global workforce would be cut. Hours later, Microsoft offered voluntary buyouts to thousands of its US staff, the first such offer in the company's history.

By the end of the day, the tally stood at roughly 23,000 positions eliminated or put on the chopping block between the two firms, according to Bloomberg.

However, both companies reported robust revenue figures, and neither was in any financial distress. AI has been the obvious guiding force behind the latest global layoff wave, but this time the shift is more structural, more targeted, as Big Tech relocates resources to hardware and reshapes business priorities.

“Headcount reduction here is not distress—it’s capital reallocation toward infrastructure,” Saravanan Balasundaram, Founder and CEO of business consulting and talent solutions firm Han Digital Solution, tells AIM.

But Indian IT is taking a different approach to these cuts.

The AI Arithmetic

Meta has guided 2026 capital expenditures to be between $115–135 billion, primarily driven by massive investments in artificial intelligence infrastructure, including data centres, NVIDIA GPUs, and custom silicon. This is a meaningful increase from the $72.2 billion spent in 2025.

Per Bloomberg, the company’s Chief People Officer, Janelle Gale, mentioned in the leaked memo that the layoffs were part of the company’s effort to run it more efficiently and to “offset the other investments”—a euphemism that barely conceals the scale of those investments.

During the last round of job cuts at Meta in January 2025, CEO Mark Zuckerberg had described this as a move to raise the bar on performance management by removing low performers. This time, the company’s language hovers around efficiency and investments.

Even Microsoft’s strategy, in the form of voluntary retirements, is also to redirect human-payroll savings into machine-capital expenditure. The pattern, industry analysts note, has become standard across Big Tech companies, which now compete on compute, not headcount.

“AI is fundamentally reshaping cost structures, but in very different ways. For Big Tech like Amazon, Google, Meta, and Microsoft, the shift is from opex to capex. Combined, they are expected to spend roughly $700 billion on AI-related capex in 2026,” Balasundaram remarks.

Meanwhile, in India

In Indian IT, the workforce crunch is materialising differently. 

TCS, India's largest IT exporter, hired 44,000 freshers in FY26. But as FY27 began, the company's tone shifted measurably as TCS CEO K Krithivasan confirmed in an interview with PTI earlier this month that the firm has made 25,000 fresher offers for FY27—a sharp pullback.

Meanwhile, Infosys, which reported FY26 revenue of $20.16 billion and guided FY27 growth at a cautious 1.5–3.5% in constant currency, is expected to maintain a similar fresher intake of around 20,000 for the year. 

The sector's overall headcount also fell in FY26: the combined workforce of the top five Indian IT firms—TCS, Infosys, Wipro, HCLTech, and Tech Mahindra—shrank by 6,981 employees, reversing the nearly 12,000 net additions made in FY25. TCS alone cut approximately 23,400 roles during the year.

For context, India produces approximately 1.5 million engineering graduates every year, and the IT services sector has historically absorbed around 20–25% of them, making it the country's largest white-collar employer. However, according to analysts, while that pipeline remains open, the entry is narrowing.

“The revenue-per-employee gap is widening fast. While global companies generate about $1.2–2 million per employee, Indian services companies generate about 50% of these numbers. Product companies are posting 10–20% engineering productivity gains, cutting headcount, and expanding margins. Indian IT is absorbing AI investment costs while carrying bench strength- cost pressure before gains materialise,” says Neeti Sharma, CEO of technology staffing and solutions provider TeamLease Digital.

Sharma adds that fresher hiring at Indian IT firms will remain moderate rather than collapse, as the industry has already gone through multiple layoff cycles over the past 12–18 months, with campus intake falling by about 50–60%.

Different Fundamentals

The contrast between Big Tech firms and Indian IT companies reflects two entirely different business architectures built over decades.

Meta and Microsoft are product companies. Their revenue comes from platforms, advertising ecosystems, cloud subscriptions, and software licences—businesses where a smaller, more specialised workforce can generate disproportionate output. When AI tools begin to automate tasks that once required a swarm of engineers, the response is to shrink the army and expand the arsenal. 

On the other hand, Indian IT firms operate on a fundamentally different model. Their revenue is tied to the volume of services they deliver to global clients, like application maintenance, business process outsourcing, digital transformation projects, and increasingly, AI implementation for enterprises. More contracts require more people to execute them.

“Indian IT bills clients hourly, and per person, so more work requires more hires. Meta and Microsoft don't work that way; their products serve millions without adding headcount,” Sharma notes.

At the same time, India's wage arbitrage remains formidable. A software engineer in India may earn 50–70% less than a peer in San Francisco or New York. That differential has not disappeared. It has widened in dollar terms as Indian salaries have grown modestly while US tech compensation exploded during the pandemic hiring boom and then corrected.

“Freshers will continue to get hired (by Indian IT firms), but the mix will shift towards AI-native skills, while mid-career roles that don’t reskill will get rotated out,” observes Gaurav Vasu, CEO and Founder of market intelligence firm UnearthInsights.

However, he notes that Indian IT firms have sharply reduced fresher hiring over the past three years, from more than 10% of total headcount to around 5%. “We expect them to stabilise at this percentage. We don’t expect them to increase this at all. That would be disastrous if they do that.”

That’s because Indian IT’s delivery models are changing, with AI spending crowding out traditional IT services budgets. According to a note by Kotak Institutional Equities, there may be a net revenue deflation of approximately 3.5% annually from AI adoption over FY27 to FY29. 

Moreover, clients are embedding productivity expectations into pricing.

“AI is shrinking billable hours and forcing Indian IT toward contracts where clients pay for outcomes, not people. As that shift spreads, hiring will fall with it. The firms making that transition fastest will cut headcount first,” Sharma shares.