Surging automation is rewriting strategies for India’s technology giants. However, the latest quarter shows the transition is painful. The six biggest service firms reported a combined loss of 2,977 employees in Q3 FY26. Consequently, stakeholders debate whether this modest decline signals deeper structural change. Meanwhile, executives trumpet record artificial-intelligence deal wins. Indian IT now balances efficiency drives, new labour rules, and relentless client demands.

Furthermore, investors track every headcount disclosure because the industry once grew strictly by adding people. Nevertheless, generative AI platforms promise higher revenue without proportional staffing. In contrast, new labour codes increased short-term costs, squeezing profits when firms need capital for innovation. Therefore, observers must examine multiple forces shaping the workforce.

Quarter Highlights At Glance

Aggregate numbers mask sharp divergence among companies. TCS cut 11,151 roles, while Infosys added 5,043. Moreover, Wipro’s acquisition lifted its tally to 242,021. Tech Mahindra trimmed 3,098 jobs as it pivots toward automation. Consequently, the sector shrank overall despite selective hiring.

The headline figures:

• TCS: 582,163 employees, down 11,151 sequentially.
• Infosys: 337,034 employees, up 5,043.
• Wipro: 242,021 employees, boosted by deals.
• Tech Mahindra: 149,616 employees, down 3,098.
• HCLTech: 226,379 employees, marginal slide of 261.
• LTTS: 23,639 employees, slightly lower.

Additionally, management calls linked staff changes to AI efficiency programs. As a result, Indian IT sees smaller delivery teams handling larger contracts. These developments underline an important truth. However, deeper drivers require scrutiny.

Drivers Behind Job Shifts

Generative AI underpins the latest productivity push. Therefore, coding, testing, and documentation now involve automated copilots. Consequently, fewer engineers support each million dollars of revenue. Analysts note that mid-level roles face the greatest pressure.

Furthermore, margin preservation motivates quick action. In contrast, rising salary costs and global competition leave little room for delay. Job cuts intensify where legacy maintenance dominates revenue. Yet demand for cloud, data, and design talent remains robust.

Meanwhile, firms invest heavily in reskilling programs. TCS alone reports 217,000 associates trained in advanced AI skills. Nevertheless, training does not instantly guarantee redeployment. Therefore, short gaps emerge between redundant skills and fresh openings. Indian IT leaders accept this friction as the price of transformation.

These drivers clarify current reductions. However, another external factor sharply influenced Q3 finances.

Labour Codes Financial Shock

India’s consolidated labour codes took effect on 21 November 2025. Consequently, companies reassessed gratuity and leave liabilities. TCS booked a ₹2,128-crore charge, while peers disclosed smaller yet material hits.

Moreover, the accounting change arrived just as automation costs accelerated. Therefore, many firms posted lower profits despite strong operating metrics. In contrast, investors welcomed transparent disclosure, believing the one-time pain clears future uncertainty.

Additionally, expanded “wage” definitions may influence future onboarding models. Some analysts predict higher engagement of gig contractors to manage liability exposure. Nevertheless, Indian IT still values stable pyramids for large deals.

The financial shock distorted quarterly optics. Yet strategic talent moves continued unabated, supported by aggressive upskilling.

Upskilling And Talent Realignment

Every major provider now runs internal AI academies. Furthermore, partnerships with hyperscalers accelerate course development. Professionals can enhance their expertise with the AI+ UX Designer™ certification. Consequently, designers learn to embed generative models into user journeys, a rapidly growing skill.

Additionally, selective campus hiring persists to refresh the base pyramid economically. In contrast, lateral hiring focuses on data engineering, prompt design, and AI governance. Job cuts therefore target roles where automation delivers quickest payback.

Moreover, NASSCOM stresses that overall technology employment still expands when global capability centres are included. However, the mix now favours higher-value profiles.

These initiatives ease displacement fears. Yet market sentiment remains mixed, prompting varied reactions.

Market Reactions And Outlook

Investors rewarded firms displaying clear AI revenue metrics. Consequently, Infosys and Tech Mahindra highlighted billion-dollar pipelines during earnings calls. Meanwhile, sceptics question how quickly productivity gains convert to margins.

Furthermore, staffing specialists report rising demand for prompt engineers, data stewards, and AI auditors. This trend offsets some Job cuts in routine support roles. In contrast, mid-career professionals without cloud or AI exposure face longer transition periods.

Analysts expect further restructuring through FY26. However, total reductions should stay modest relative to the 5.7-million-strong national tech workforce. Therefore, Indian IT will likely display a “grow and prune” pattern each quarter.

Stakeholders watch three signals: sequential headcount moves, disclosed AI revenues, and any regulatory tweaks. These indicators will shape expectations heading into Q4.

Actionable Steps For Professionals

Practitioners should future-proof careers proactively. Moreover, earning specialised credentials speeds credibility. Besides the earlier mentioned course, consider advanced cloud certifications to complement AI skills.

Additionally, build project portfolios demonstrating real value from generative tooling. Consequently, recruiters can gauge readiness immediately. Meanwhile, monitor employer disclosures to spot emerging capability gaps.

Finally, cultivate soft skills like consulting communication. Indian IT firms increasingly sell business outcomes, not just code delivery. Therefore, multidisciplinary talent enjoys premium demand.

These steps help individuals navigate volatility. Nevertheless, organisations also share responsibility to sustain inclusive growth.

Indian IT’s Q3 story blends efficiency, regulation, and innovation. Moreover, AI impact reshapes staffing faster each quarter. However, proactive learning turns disruption into opportunity. Consequently, professionals and businesses that embrace continuous upskilling will thrive. Explore the linked certification today and position yourself at the forefront of tomorrow’s digital economy.