India’s technology industry crossed $282.6 billion in revenue for FY2025, growing 5.1% and adding $13.8 billion in incremental revenue, according to NASSCOM’s Annual Strategic Review 2025. The sector remains on track to hit $300 billion in FY2026. But beneath that headline growth, AI is quietly reshaping how the industry makes money and how many people it needs to do so.
The clearest signal is what industry leaders now call “AI deflation.” HCL Technologies’ CEO said in April 2026 that AI-driven productivity gains would shrink future revenue by 3-5% in the coming year, “and perhaps further.” TCS executives have used a blunter term: “degrowth.” The logic is straightforward — AI coding assistants and automation tools let clients get the same work done with fewer billable hours, compressing the volume-based pricing model that has defined Indian IT services for 30 years. TCS posted a 0.5% year-over-year revenue decline in its most recent reporting period, while HCL (+11.2%), Wipro (+4%), and Infosys (+3.1%) still grew, but Wipro’s CFO acknowledged “lower margins in some deals” — a direct sign of AI-related pricing compression.
Headcount tells a parallel story. FY2024 marked a structural break: Infosys cut 25,994 employees, a 7.6% headcount decline and its first annual drop since 2001. TCS shed 13,249 employees — its first headcount reduction in 19 years, following three consecutive quarterly declines. Wipro lost more than 21,800 employees over twelve months. Collectively, the top IT firms cut over 50,000 jobs in that period. HCL was the exception, adding roughly 3,617 employees in one quarter and posting a further ~2% headcount increase into FY2026 — evidence that growth and AI investment aren’t mutually exclusive, but require deliberate strategy.
At the sector level, NASSCOM’s FY2025 estimate shows net new hiring of 126,000 employees across a 5.8-million-strong workforce — positive, but a fraction of the hiring pace the industry sustained in the pre-AI decade. Notably, 45% of tech CEOs surveyed by NASSCOM expect an improved hiring environment in FY2026, suggesting the contraction phase may be bottoming out as companies pivot toward AI-services roles rather than traditional delivery roles.
Where is the offsetting growth coming from? IDC forecasts India’s AI spending will reach $6 billion by 2027, and NASSCOM’s segment data shows engineering R&D services ($55.7 billion) and software products ($16.1 billion) — both AI-intensive categories — expanding faster than legacy IT services ($137.1 billion, still the largest segment but growing slowest). Domestic tech revenue also grew 7% year-on-year in FY2025, outpacing the 4.3% growth in export-driven IT services, indicating India’s own digital economy is a growing buffer against AI-driven pressure on the traditional offshore services model.
The data points to a bifurcated sector: firms investing early in AI-native delivery (HCL) are growing headcount and revenue together, while firms anchored to volume-based staffing (TCS, Infosys, Wipro) are shedding jobs even as industry revenue climbs. The transition is measurable and already years into a multi-year restructuring.
Sources:
NASSCOM Annual Strategic Review 2025
The Register — “AI deflation comes to India’s tech services giants” (April 2026)
Business Standard — TCS, Infosys, Wipro headcount exits FY24