AI-Driven Layoffs Surge: India's IT Sector Faces Up to 35,000 Job Losses in 2026

The global technology layoff wave is back in 2026, but unlike the post-pandemic job cuts of the past few years, this one is looking very different.

The trigger is no longer slowing demand or over-hiring during Covid. Instead, artificial intelligence (AI) has become the common thread linking layoffs across Silicon Valley, with companies restructuring teams, flattening management layers, and automating routine work even as they report record revenues and pour billions into AI.

Microsoft, Oracle, Meta, and More Join the Layoff Wave

Microsoft this week became the latest tech giant to announce fresh layoffs, eliminating around 4,800 jobs, or about 2.1% of its global workforce. The company maintained the roles were "not being replaced by AI", but also acknowledged that AI is changing how work gets done and automating many everyday tasks.

It joins a growing list of companies — including Oracle, Meta, Cisco, Amazon, Cloudflare, Dell, Snap, and PayPal — that have carried out thousands of job cuts this year while simultaneously doubling down on AI investments.

According to layoffs tracker Layoffs.fyi, around 120,000 tech jobs have already been cut globally in 2026.

India's IT Sector Could Lose Up to 35,000 Jobs

India's $315-billion technology and software services industry could eliminate 25,000-35,000 jobs this year, according to estimates cited by ETTech.

Between 10,000 and 15,000 professionals had already lost their jobs through silent layoffs till May, staffing firm TeamLease said, while CIEL HR Services estimates around 12,000 layoffs have already taken place this year. By the end of 2026, total job losses could reach anywhere between 18,000 and 21,000, taking the combined layoffs across 2025 and 2026 to as much as 43,000 jobs.

Unlike last year, however, these layoffs are not being announced with press releases or earnings calls. Instead, many companies are quietly trimming employees through performance-linked exits, skill-based restructuring, and organisational redesign.

The trend is already visible in hiring numbers. The combined headcount of India's five largest IT firms — TCS, Infosys, HCLTech, Wipro, and Tech Mahindra — fell by 7,389 employees in FY26, reversing the modest gains seen a year earlier. TCS alone reduced its workforce by more than 23,000 employees.

The Reason Isn't Weak Demand Anymore

If 2025 was about correcting over-hiring during the pandemic, 2026 is increasingly about redesigning organisations for the AI era.

According to TeamLease, companies are now targeting duplicated roles, redundant functions, and bloated management structures instead of carrying out sweeping workforce reductions.

Demand is simultaneously shifting towards AI, cloud computing, cybersecurity, platform engineering, and specialised engineering work, while routine and easily automatable functions are coming under increasing pressure.

"The workforce reductions we are seeing are mainly due to companies reshaping how they operate," Aditya Narayan Mishra, managing director and chief executive of CIEL HR Services, told ETTech.

Big Tech Is Cutting Jobs Even as Revenues Rise

One of the defining features of the current layoff cycle is that many companies announcing job cuts are not struggling financially.

• Microsoft announced around 4,800 layoffs while continuing to invest heavily in AI infrastructure.
• Oracle disclosed in its annual regulatory filing that it had reduced its workforce by around 21,000 employees over the past 12 months, saying the adoption and deployment of AI technologies had resulted — and could continue to result — in workforce reductions.
• Meta laid off around 8,000 employees, or roughly 10% of its workforce, while simultaneously moving about 7,000 employees into AI-focused roles.
• Cisco announced nearly 4,000 job cuts despite posting record quarterly revenue, saying the restructuring was aimed at reallocating resources towards silicon, networking, security, and AI.
• Cloudflare reduced around 20% of its workforce despite reporting its strongest quarter ever.

Fresh Graduates Already Feeling the Impact

The changing hiring strategy is beginning to show up on college campuses as well.

According to a recent Mint report, at least four major technology companies — TCS, Cognizant, Accenture, and Oracle — have either delayed onboarding fresh engineering graduates or withdrawn job offers altogether.

In Accenture's case, candidates who had already cleared final interviews were informed that the roles they had interviewed for were no longer being recruited. Oracle reportedly withdrew offers made to students from engineering colleges after internships, describing the move as arising from "unavoidable circumstances".

The Jobs Aren't Disappearing, They're Changing

While routine and repetitive roles are coming under pressure, demand continues to remain strong for professionals with expertise in AI, cloud, cybersecurity, data engineering, and platform engineering.

For India's technology workforce, the challenge may therefore be less about surviving another layoff cycle and more about adapting to an industry where revenue growth is no longer tied to adding more employees, but increasingly to getting more output from fewer people using AI.