"companies reduce staff through automating routine work while still struggling to hire AI specialists, despite a surge in client demand for AI. "Top five Indian IT firms added only 17 net employees in the first nine months of FY26 versus 17,764 in the same period last year," said Chirag Mehta, vice president and principal analyst at Constellation Research. "That is what AI-era productivity looks like in practice: more output per employee, fewer benches, and tighter utilization.""
"The supply of skilled talent is far below demand, according to Biswajeet Mahapatra, principal analyst at Forrester. "India has only one qualified engineer for every ten generative AI jobs, and firms report that only 15-20 percent of the workforce has AI-ready skills due to rapidly evolving technologies, high salary inflation, and limited advanced training and research capabilities," Mahapatra said. This shift was evident in the latest earnings for the October-December quarter for the top IT services firms."
Indian IT services firms are shifting from large-scale hiring to measured workforce strategies, reducing staff through automating routine work while facing strong client demand for generative AI. The top five firms added only 17 net employees in the first nine months of FY26 versus 17,764 a year earlier, reflecting higher output per employee and tighter utilization. Skill supply lags demand, with roughly one qualified engineer for every ten generative AI roles and only about 15-20% of workers possessing AI-ready skills due to rapid technology change, salary inflation, and limited advanced training. Major vendors reported sequential headcount declines, with Infosys as a partial outlier.
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