Aniket PujariWhile Indian IT stocks crashed on Wednesday amid fears that AI tools could disrupt traditional outsourcing models, Deepak Shenoy, CEO of Capitalmind AMC, offered a practical lens to view the situation — how to contain potential IT job losses in the AI era rather than panic over disruption. Instead of viewing AI as a threat alone, he pointed to a larger transition underway — and how companies can contain potential job losses by adapting faster.
“Interesting that indian IT stocks are down now because of a fear of AI cutting into their business. The trajectory might not be easy to predict but it’s the boring, repeatable job that will go first, and these companies will need to upskill to become the ai orchestrators of choice,” he posted on social media platform X.
“They don’t even need to productise, they need to embrace the ai based service model, and already many of them are,” the post added.
The Great Resignation
To understand his point, it helps to look back at “The Great Resignation” that followed COVID. Between 2021 and 2023, Indian IT firms such as Tata Consultancy Services Limited, Infosys Limited, and Wipro Limited saw attrition rates surge to 25–35%. Employees switched jobs rapidly, salaries jumped 30–80%, and companies hired aggressively to retain talent and meet global digital demand. Remote work opened global opportunities, startups offered premium pay, and IT firms expanded headcount at an unprecedented pace.
Companies were forced into record campus hiring, retention bonuses, and aggressive lateral recruitment to plug talent gaps. Headcounts swelled rapidly as firms raced to meet surging digital transformation demand from global clients. The shift to work-from-home blurred geographic boundaries, allowing Indian engineers to access overseas jobs without relocating. Startups, GCCs, and global tech firms competed fiercely for the same talent pool.
By late 2023, however, demand began normalising. Many IT firms were left overstaffed, with bloated middle management layers and higher wage bills built during the hiring frenzy.
AI is changing the game
What the market is seeing now, Shenoy suggests, is the reverse side of that phase — a correction where efficiency, automation, and skill relevance matter more than headcount.
Hiring has slowed, net additions are falling, and AI is threatening to automate many of the repetitive tasks that earlier required large teams.
According to Shenoy, AI is changing the hiring game.
“You’ll need less people to do a project, and less middle management. So move towards that game instead, and most IT cos are already doing this,” his post said.
He pointed out that net hiring is already down, visa routes for onsite opportunities are narrowing, and employees will need to reskill continuously.
“Net hires are down. Middle managers that added little value are staring at being fired. Your skill isn’t managing people as much as getting things done, ai or human. Employees have to reskill, again. The visas are dying so you won’t get the path to a permanent residency abroad anymore, so make the best of your skills here,” he posted.
Tech rout today
Indian technology shares came under intense selling pressure on Wednesday, February 4, tracking weakness in US tech stocks and reacting to fresh concerns around AI startup Anthropic’s latest developments.
The Nifty IT index slumped more than 7%, with all its constituents trading in the red. Infosys tumbled close to 9% to ₹1,510.10, marking its steepest single-day fall since April 2023, while TCS declined over 7%. Stocks such as Tech Mahindra, LTIMindtree, and Coforge also dropped around 7% each. Meanwhile, Mphasis, Persistent Systems, HCL Tech, and Wipro fell between 5–6%.
The selloff was sparked by reports that Anthropic had rolled out new AI tools designed to automate functions across legal, compliance, marketing, and data analytics — segments where traditional software providers and IT services firms have long generated steady revenues. The rally in the Indian Rupee added further strain, as a stronger currency typically weighs on margins for export-driven IT companies.
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