Why Infosys and Wipro may face pressure after TCS cuts over 12,000 jobs amid shifting demand dynamics

Tata Consultancy Services (NSE: TCS, BSE: 532540) shocked the Indian IT services industry in late July 2025 when it announced plans to cut more than 12,000 jobs globally, amounting to about 2 percent of its total workforce. The move, described as a “workforce realignment,” is aimed at improving margins, reducing bench time, and sharpening AI-driven service delivery.

The announcement, one of the largest layoffs ever in the sector, is now sending ripple effects across Tier I IT players such as Infosys Limited and Wipro Limited. Institutional investors and analysts are debating whether these peer companies—facing similar challenges around bench utilization, weak discretionary spending, and AI-induced productivity gains—might be pressured to follow TCS’s lead.

What does TCS’s workforce cut reveal about vulnerabilities at Infosys and Wipro in 2025?

The decision by Tata Consultancy Services highlights structural pressure points that may also exist at Infosys and Wipro. Staffing firm executives noted that rising bench time and skill mismatches are common industry-wide, particularly in mid-level roles. These factors increase the risk of large bench pools becoming financially unsustainable if new deals fail to materialize at the pace expected.

Industry data shows that many Indian IT services firms have begun tightening bench utilization policies. Employees now face an average cap of 35–45 bench days annually before their positions come under review. Analysts noted that this shift toward “zero bench tolerance” reflects mounting investor scrutiny over margins and return on invested human capital.

According to multiple observers, employees in mid-management or repetitive task-driven roles, particularly those aged 35–50, face the highest redeployment risk if they cannot transition to AI-augmented projects. These conditions are not unique to Tata Consultancy Services, raising questions about whether peers might eventually be forced to cut jobs at scale.

How are Infosys and Wipro responding differently to workforce efficiency pressures?

Infosys Limited has publicly distanced itself from the idea of layoffs, positioning its talent strategy around reskilling and selective hiring. CEO Salil Parekh recently indicated that the firm plans to hire up to 20,000 fresh graduates this year. Infosys also disclosed that it has trained approximately 275,000 employees in artificial intelligence, cloud, and related digital technologies.

Parekh stated that “reskilling, not redundancy” will remain the company’s focus, citing steady staff utilization and ongoing enterprise demand in key client sectors. This stance, coupled with its proprietary AI platforms such as Infosys Topaz and its strong Finacle banking suite, is intended to reassure employees and investors that the company can achieve productivity gains without resorting to cuts.

Wipro Limited, however, has not provided similar assurances. Its stock price fell as much as 3 percent alongside other top IT companies immediately after Tata Consultancy Services’ announcement, reflecting market anxiety that other firms might be next. Institutional sentiment indicates that Wipro faces higher uncertainty if deal momentum slows, given its relatively lower scale of AI platform investments and recent margin volatility.

What do hiring and net addition data suggest about sector-wide workforce trends?

Hiring data from the first quarter of fiscal 2025–26 points to a marked slowdown in net additions across Tier I Indian IT firms. Collectively, Tata Consultancy Services, Infosys, Wipro, HCLTech, and Tech Mahindra added just 4,787 employees on a net basis during the quarter. This is a sharp drop from the more than 53,000 net additions recorded during the same quarter in 2021.

Tata Consultancy Services led the pack with 6,071 gross hires, while Infosys added a mere 210 employees. Wipro, HCLTech, and Tech Mahindra each reported net workforce reductions. This hiring slowdown reflects a deliberate pivot away from scale hiring and toward project-specific recruitment of domain specialists, particularly in AI, cybersecurity, and cloud engineering.

Staffing agencies report that companies are now pruning roles and skill sets that do not align with high-value transformation mandates. Fresh graduate hiring has also been sharply reduced, with preference shifting to experienced professionals capable of cross-functional delivery from day one.

What is institutional sentiment around the likelihood of broader job cuts across Infosys and Wipro?

Institutional investors view Tata Consultancy Services’ layoff as a potential leading indicator of deeper realignment across the sector. Analysts have warned that the cost pressures driving TCS’s move—bench inefficiency, weak discretionary spending, and AI productivity disruption—are industry-wide and could eventually compel other Tier I players to take similar action.

Nasscom, India’s apex IT industry body, recently projected that up to 1–2.7 lakh jobs across IT services, BPM, and R&D segments could be at risk if companies fail to redeploy unbillable staff. That estimate, amounting to roughly 2–5 percent of the industry’s workforce, places both Infosys and Wipro firmly in the spotlight.

For now, Infosys’s public commitment to avoid layoffs has been positively received, but market commentators stress that this position will be tested if utilization falls or if enterprise IT budgets tighten further. Wipro’s relative silence has fueled speculation that it may have less flexibility than its peers, especially if margins remain under pressure in the coming quarters.

How could Infosys’s talent strategy reduce its exposure compared to Wipro?

Infosys appears to be taking a proactive approach by aligning hiring with future-focused capabilities. The firm has embedded AI productivity tools across software development and support, claiming 5–20 percent efficiency gains in client delivery. Its AI-driven Topaz suite and Finacle core banking platform have also contributed to better utilization metrics, according to internal disclosures.

Wipro, by contrast, has not articulated a similar platform-led productivity narrative, leaving investors uncertain about its ability to offset revenue headwinds with efficiency improvements. Analysts believe that without strong deal momentum or significant reskilling programs, Wipro may face greater pressure to optimize its bench through layoffs or aggressive redeployment.

What is the forward-looking outlook for Infosys, Wipro, and the broader Indian IT sector?

If Tata Consultancy Services’s move is an outlier, peers may be able to maintain morale and avoid similar disruption. However, if the layoffs represent the beginning of a broader trend toward AI-driven lean delivery, Infosys and Wipro will be judged by how quickly they can pivot talent strategies.

Employee unions and trade associations have already signaled that they will resist any attempts by other IT majors to replicate TCS’s job cuts. For Infosys and Wipro, maintaining productivity and profitability without mass layoffs will be a delicate balancing act, particularly as global clients demand higher output with fewer resources.

The next two quarters of fiscal 2025–26 are likely to be critical. Institutional investors will closely track headcount trends, utilization levels, and large-deal pipelines for evidence of whether Infosys and Wipro can navigate sector pressures without resorting to the drastic measures now underway at Tata Consultancy Services.