India’s globally prominent information technology sector has begun reducing headcount as artificial intelligence reshapes demand for labour and services. According to the Financial Times, several large employers have cut staff by as much as 6% this year.
The IT industry has been a major engine of India’s economic growth and middle-class expansion over recent decades. Yet rapid adoption of AI and related technologies is triggering structural change that can eliminate roles. As one IT worker put it: “The tool that we gave our sweat, blood and bones to — it threw us out.”
Political responses and market impact
Prime Minister Narendra Modi has downplayed concerns about job displacement, but market signals are clear: India’s IT stock index fell 18% in 2026. Part of this decline reflects recognition that India is lagging in building frontier AI capabilities.
Company and government reactions
In response to the disruption, New Delhi and firms are shifting strategy in some areas, placing greater emphasis on manufacturing consumer electronics while pursuing reorganisations and automation. The upheaval is not unique to India: Japanese IT firm NEC has opened a new department staffed entirely by AI agents.
Why it matters
India’s IT sector is a significant employer and exporter; large-scale layoffs and technological transformation could have lasting social and economic consequences, affecting middle-class income stability and the country’s employment structure.
(Source: Financial Times; article by Brendan Ruberry.)
