Indian IT services companies are facing AI impact on future hiring
Simply put, if an IT services company adds 30 employees for every $100, approximately ₹9,000 in new jobs each year, fewer employees could be added for the same amount of increased revenue due to AI-led productivity.
Artificial intelligence (AI) is primarily consuming coding, customer support and application maintenance roles.
Tata Consultancy Services (TCS) Ltd, Cognizant Technology Solutions Corp. and HCL Technologies Ltd stated that project delivery models have improved and emphasized that the increase in revenue and number of personnel due to artificial intelligence is not linear.
This is a first for the industry, which sees increasing headcount as a barometer of revenue growth. Traditionally, higher headcount is associated with increased demand for IT services and vice versa. The change in attitude of the country’s largest IT services companies comes at a time when artificial intelligence is reshaping the industry and encouraging companies to re-evaluate project delivery to customers.
HCLTech, India’s third largest IT services firm, was the first of the big five companies to highlight the disconnect between revenue growth and headcount.
The end of the old ways
“If you see our revenue over the last couple of years, we’ve grown 4-5% and our headcount hasn’t grown. That gives you the sense that there are some non-linear things going on. Even this quarter, there’s at least a 1.5% or 1% difference in revenue growth and headcount. And on a year-over-year basis, there’s a 1.8% increase in revenue per employee. So that’s the kind of growth we’d expect to see.” HCLTech’s chief executive officer (CEO) C. Vijayakumar said during the company’s post-earnings call with analysts on October 13.
HCLTech finished last quarter with revenue of $3.64 billion, up 2.8% sequentially.
At least one brokerage firm has attributed this trend to the use of artificial intelligence.
“Non-linearity (in revenue and headcount growth) is evident as revenue grows faster than headcount (2.4% vs 1.6%), reflecting productivity gains driven by AI,” Motilal Oswal Financial Services analysts Abhishek Pathak, Keval Bhagat and Tushar Dhonde said in an Oct. 13 note.
While HCLTech highlighted the growing divergence, established Indian company Cognizant also expressed a similar view.
“For much of the last 30 years, IT services have grown through a linear model. More people and more projects have driven incremental growth. AI is reshaping that equation by compressing time, cost and complexity and redefining how value is created,” Cognizant CEO S. Ravi Kumar said during the company’s post-earnings call on Oct. 29.
According to Phil Fersht, CEO of HFS Research, “The era of peer-to-peer growth between people and revenue is over. AI and automation are breaking that connection by incorporating productivity and repeatability into the delivery model. The new game is about turning services into software and getting more value from the same workforce.”
gain productivity
Cognizant is an IT firm of Indian origin as almost three-quarters of its workforce is based in the country. It completed the last quarter with a revenue of $5.42 billion, with a sequential increase of 3.2%.
Management of a third company, when asked about the interaction between humans and AI, said this trend is causing a shift in the IT services model.
“I think that’s the direction the model is going to evolve in. These are early days, but we’re starting to make commitments on outcome-oriented projects with select customers. And there are learnings, and this is a model that we’re seeing gradually evolve and become more prevalent among customers,” TCS Chief Operating Officer Aarthi Subramanian said during the company’s post-earnings analyst call on Oct. 9.
TCS finished last quarter with revenue of $7.47 billion, up 0.6% sequentially.
Mint It had reported on March 26 that the country’s $283 billion IT industry was considering a change in its delivery model. Traditionally, companies are billed by IT service providers based on the number of staff assigned to a project. Now companies are increasingly being billed based on the business results their IT outsourcing providers deliver.
The growing gap between revenue growth and headcount may not bode well for the country’s 1.5 million engineering graduates, many of whom are seeking jobs at the country’s largest IT services firms. The rise of automation tools has the potential to make many human-led tasks redundant, and universities are now looking to equip their students with AI certifications to keep them market-ready.
AI is primarily consuming coding, customer support and application maintenance roles.
employee value
TCS, Cognizant and HCLTech completed the July-September 2025 period with 593,314 employees, 349,800 employees and 226,640 employees. While TCS reduced its headcount by 19,755 in the last quarter due to its previously announced largest layoff campaign, Cognizant and HCLTech increased their headcount by 6,000 and 3,489 people respectively.
One of the key determinants of this trend is the income each employee generates for his company.
HCLTech generates the highest revenue per employee among the country’s six largest IT services companies. HCLTech and TCS received $61,388 and $49,902 per employee, respectively. On the other hand, Cognizant, which follows the January-December financial calendar as opposed to the April-March calendar of the Indian IT industry, reported $57,665 per employee at the end of 2024.
Of course, HCLTech gets nearly a tenth of its business from selling software products that fewer people use.
