All of this could have cascading effects on India’s broader economy, which has struggled to create jobs for the millions of young graduates that enter the workforce every year.<\/p>\n
In the absence of a strong manufacturing sector, these software companies – which made India the world’s back office in the 1990s – were the preferred employment option for hundreds of thousands of new IT workers. They birthed a new, affluent middle class, spawning growth in many cities and fueling demand for cars and homes.<\/p>\n
But as stable, well-paying jobs shrink, there are now questions over India’s services-led economic boom.<\/p>\n
Until just a few years ago, India’s IT majors would absorb 600,000 fresh graduates every year. In the last two years, that number has dramatically fallen to about 150,000, according to TeamLease Digital.<\/p>\n
Other emerging sectors such as financial technology startups and GCCs (global capability centres) \u2013 which are off-shore units of multinational companies that perform supporting tasks like IT, finance or research and development – are absorbing the rest, but at least “20-25% of fresh graduates will have no jobs,” says Ms Sharma.<\/p>\n
She adds that the “GCCs will never match the volume of hiring that the IT companies did”.<\/p>\n
Several top business leaders in India have begun flagging the economic consequences of these trends.<\/p>\n
India’s trimmed down IT sector could “negatively impact many allied services and industries, crash real estate and give a big blow to premium consumption,” D Muthukrishnan, one of south India’s largest distributor of mutual-funds wrote on X, reacting to TCS’s announcement. <\/p>\n
A few months ago Arindam Paul, entrepreneur and founder of the motor technology company Atomberg, warned of the potentially crippling impact of AI on India’s middle class in a LinkedIn post. <\/p>\n
“Almost 40-50% white collar jobs that exist today might cease to exist,” Paul wrote. “And that would mean the end of the middle class and the consumption story.” <\/p>\n
How quickly Indian tech giants adapt to the gamut of disruptions being brought by the AI revolution will decide whether the country can retain its edge as a global technology player. And whether it can expand its consuming middle-class that can keep its GDP growth on track.<\/p>\n
Follow BBC News India on Instagram, external<\/a>, YouTube,, external<\/a> X, external<\/a> and Facebook, external<\/a>.<\/p>\n