 |
|
The Indian IT industry is facing a period of significant transition, driven by the rapid advancement of artificial intelligence (AI) and automation. This technological shift is prompting companies to re-evaluate their workforce strategies, leading to concerns about potential job losses and the need for widespread reskilling initiatives. The National Association of Software and Service Companies (Nasscom), the premier trade body for the Indian IT industry, has issued a warning about potential workforce rationalization as traditional skillsets become obsolete and new skills related to AI and other emerging technologies gain prominence. This warning comes in the wake of Tata Consultancy Services (TCS), India's largest software exporter, announcing plans to reduce its global workforce by approximately 2% in FY26, which translates to around 12,200 employees. This decision by TCS highlights the challenges faced by IT companies in adapting to the changing technological landscape and the need to realign their workforce to meet evolving client demands. The announcement from TCS and the subsequent warning from Nasscom have sparked a debate about the future of jobs in the IT sector and the measures needed to mitigate the negative impact of technological disruption. The situation underscores the importance of proactive measures to reskill and upskill the existing workforce to ensure that India maintains its competitive edge in the global technology market.
According to TCS's chief executive and managing director, K Krithivasan, the primary reasons for the planned workforce reduction are the increasing skill gap and the lack of feasibility in redeploying mid and senior-level employees in roles that require new skills. This indicates that the skills possessed by a significant portion of the current workforce are no longer aligned with the needs of the company and its clients. The rapid pace of technological change, particularly in areas such as AI, cloud computing, and data analytics, is creating a demand for specialized skills that are not readily available within the existing workforce. As a result, companies like TCS are finding it necessary to restructure their workforce and invest in training programs to equip their employees with the skills needed to thrive in the new technological environment. Nasscom echoes this sentiment, stating that the tech industry is at an inflection point, with AI and automation becoming integral to how businesses operate. The industry body anticipates further transitions as organizations pivot towards product-aligned delivery models, driven by rising client expectations for agility, innovation, and speed. This shift is likely to reshape traditional service delivery frameworks and, in the near term, may lead to further workforce rationalization as traditional skillsets are re-evaluated. The industry is moving away from the older project-based IT service and toward platform-based solutions and value-added services that create higher profit margins. The new roles demand specialized technical skills in AI, data science, cloud computing and cybersecurity, and a deep understanding of the verticals served. While coding is still an important skill, the new roles also require experience in managing product roadmaps, product design and customer experience.
The challenges posed by the changing technological landscape are not limited to TCS or the Indian IT industry alone. The need for reskilling and upskilling is a global phenomenon that is affecting industries across the board. However, the Indian IT industry faces unique challenges due to its large workforce and its dependence on providing IT services to clients around the world. To address these challenges, Nasscom has called for a collaborative effort involving the tech industry, academia, and the government to bridge the skilling divide and make talent development a national and business imperative. The industry body emphasizes the importance of investing in training programs, creating new educational opportunities, and fostering a culture of lifelong learning to ensure that the workforce remains relevant and competitive. The government has already taken note of the issue, with the Ministry of Electronics and Information Technology (MeitY) closely monitoring the developments surrounding TCS. The government expects the industry and academia to address issues related to skilling and reskilling and is likely to play a more active role in facilitating these efforts. The government is also likely to work with industry and training partners to create a new skills framework that is better aligned with the needs of the industry.
Nasscom highlights that hiring trends will continue to evolve, with increasing demand for deep, specialized expertise. The industry body acknowledges that there is no one-size-fits-all solution and that each enterprise will need to navigate this transition based on its unique strategic needs. However, Nasscom also points out that the Indian technology industry is already taking significant steps in preparing its talent base for this shift. As of Q4FY25, over 1.5 million professionals have been trained in AI and GenAI skills across levels. The advanced AI skilling initiatives have reached more than 95,000 employees in leading listed firms, covering AI-native cloud, embedded AI, and applied intelligence certifications. These initiatives demonstrate the commitment of the Indian IT industry to reskill and upskill its workforce and to prepare it for the challenges and opportunities of the AI era. The fact that 1.5 million professionals have been trained in AI and GenAI skills is a testament to the industry's proactive approach to addressing the skills gap. The reskilling effort has been driven by the need to service global clients that are demanding capabilities in new technologies. The Indian IT sector will continue to be a source of skilled technical talent for the world, although the specific skills that are needed will continue to evolve.
The situation underscores the need for individuals to take ownership of their own professional development and to proactively acquire new skills to remain employable. The rapid pace of technological change means that skills that are in demand today may become obsolete tomorrow. Therefore, it is essential for individuals to continuously learn and adapt to new technologies and to develop a mindset of lifelong learning. The emphasis on AI and GenAI skills highlights the importance of developing expertise in these areas. However, it is also important to develop a broader set of skills that are relevant to the changing technological landscape. These skills include critical thinking, problem-solving, communication, collaboration, and creativity. These skills are essential for navigating the complexities of the modern workplace and for adapting to new challenges and opportunities. One of the biggest challenges of the reskilling effort has been that the skills needed are changing so rapidly. As an example, the initial focus was on large language models (LLMs), which became widely adopted in late 2022. Then there was a need to quickly shift focus to generative AI, which allows the creation of new content, ranging from text and images to music and videos. In 2024, the focus is already shifting to new AI platforms that will allow businesses to develop AI models faster and more easily.
The workforce rationalization announced by TCS and the warnings issued by Nasscom are a sign of the significant challenges and opportunities that lie ahead for the Indian IT industry. The industry is at a critical juncture, and its success will depend on its ability to adapt to the changing technological landscape and to equip its workforce with the skills needed to thrive in the AI era. A collaborative effort involving the tech industry, academia, and the government is essential to bridge the skilling divide and to ensure that India remains a leader in the global technology market. The Indian IT industry has a long and successful history of adapting to change. From the early days of providing basic IT services to the current era of AI and cloud computing, the industry has consistently evolved to meet the changing needs of its clients. There is no reason to believe that the industry will not be able to overcome the challenges it faces today and continue to thrive in the years to come. A lot of the innovation that has happened in IT service in India has been driven by necessity. The Indian IT services industry has been in a state of constant reinvention over the last 30 years, and this has allowed it to remain competitive in the global IT services industry. The combination of a robust educational ecosystem and a culture of continuous learning will ensure that India remains a leader in the global technology market for many years to come.
Source: Nasscom warns of workforce rationalisation as legacy IT skills face reset amid TCS job cuts