Shashi Tharoor warns of ‘IT apocalypse’: 5 lakh tech jobs at risk as India’s software dream hits crisis point

The IT sector is faced with unprecedented job cuts, with over 2 lakh layoffs that have already taken place in 2025. To add to the pain of IT professionals, Thiruvananthapuram MP Shashi Tharoor said that around 5 lakh jobs in the IT sector might be impacted by the end of the fiscal year.

Citing industry insiders, he said in an opinion piece titled 'India's IT dream is at a crossroads' in The Hindu, "The industry estimates that close to 500,000 IT jobs might be at risk by the end of the fiscal year. Insiders say these are not likely to be mass firings of campus recruits but targeted layoffs in mid- and senior-management, delivery roles, and developer positions that quietly remain unfunded without triggering headlines."

He added that Tata Consultancy Services' (TCS) decision to cut around 3.2 per cent of its workforce in India, primarily at mid- and senior-level roles, is not an isolated event. Tharoor mentioned that this is happening in the US as well, with Amazon and Meta laying off 14,000 and 8,000 employees, respectively.

But why are tech companies laying off employees in such huge numbers? As per Tharoor, the layoffs are an indication of the evolution of IT business models.

"The commoditised service export playbook — staffing engineers for global software projects and earning margins from currency arbitrage — is fading. In its place comes the rise of AI-led automation, machine learning, and Robotics Process Automation (RPA). New business models reduce headcount needs."

He added that many routine technical tasks have been automated, pushing companies to adopt high-value, domain-rich innovation.

"Companies in the U.S. now pay fresh Indian engineers far lower than before, thanks to hybrid work models. Meanwhile, hiring in India has slowed as clients overseas prefer to operate with leaner teams. The days of sending a mid-level professional to the U.S. to execute tasks that would not rake in such a level of profit are over."

He further mentioned that client budgets have reduced drastically in the US and Europe, where economic uncertainty has led to cautious IT spending. Tharoor noted that the outsourcing model that relied on scale and cost arbitrage is being replaced by the one which values specialised expertise, lean teams and AI fluency.

Elaborating further on India's outsourcing model, he wrote: "India’s IT sector was built on the back of a simple model: hire thousands of engineers, train them in basic coding, and deploy them to serve global clients. It was a digital assembly line — efficient, scalable, and profitable. But that model is now — let us be blunt — obsolete."

He mentioned that clients today don't need "armies of coders" and want solutions instead. "They want cloud-native architectures, cybersecurity frameworks, and generative AI integrations. They want fewer people who can do more. And they want them fast. This shift has exposed a skill mismatch in the Indian IT workforce."

Furthermore, he suggested that skilling needs to be reimagined in India and engineering colleges need to overhaul their curricula. He said that the government needs to incentivise industry and not just digital literacy. "India's 4 lakh annual engineering graduates cannot rely solely on outdated pedagogy. They need AI, cloud computing, blockchain, and product thinking skills."