With attrition hitting 13%, India’s largest IT firm, TCS, reported a net decrease of 5,370 employees in Q3 FY25, bringing its total workforce to 607,354. This decline follows two consecutive quarters of headcount growth, marking a significant shift in the company’s employment trends.
Despite this, Milind Lakkad, chief HR officer, shared that the firm has had over 25,000 promotions in Q3, bringing the total for the year to over 110,000. Lakkad said the company wants to get on track with its campus hiring goal of 40,000 people this year.
Meanwhile, TCS reported that its clients are actively investing in generative AI and agentic AI while building robust data foundations. The firm has started working on AI agents and drug discovery for its clients. This runs quite in contrast with the firm’s upskilling initiatives since many employees have yet to be trained in AI.
No AI Washing
This headcount reduction is not limited to TCS. India’s top five IT firms—Infosys, Wipro, HCLTech, Tech Mahindra and TCS—collectively experienced a decline for the seventh straight quarter. In the first quarter of FY25 alone, these companies saw a combined reduction of 2,034 employees compared to the previous quarter.
Tech Mahindra, which reported the highest YoY profit of 93%, also saw a 3,785 headcount decline. Meanwhile, the firm has actively invested in generative AI and is the only big Indian IT company that has built its own sovereign LLM and framework.
The company plans to hire 6,000 freshers this fiscal year, with 3,000 already onboarded in the last two quarters.
Wipro, which has also decided to shift its focus to agentic AI with $1 billion worth of deals, saw a decline of 1,157 employees. Chief Srini Pallia said that the company wants to experiment in emerging areas like customer service and supply chain management.
Though it sounds ideal, it is also the reason for the decline in the workforce, as AI agents can reduce the reliance on the human workforce.
Wipro also plans to hire around 12,000 freshers this fiscal year.
Despite the hiring, the IT industry is expected to add less than a fourth of the 60,000 people it added in the previous fiscal year by the end of FY2025.
What’s to Learn?
Though the individual reductions in headcount were high, the overall count this quarter stands low because Infosys and HCLTech increased their employee counts by 5,591 and 2,134, respectively. This is while both firms made several announcements about their AI plans this quarter.
Salil Parekh, CEO and MD of Infosys, revealed that the firm had built four small language models for its clients and was also building over 100 AI agents. “We are clear about what we are doing in generative AI,” Parekh said. He added that Infosys was not ‘AI washing’ like some others in the industry, but instead, it was doing real generative AI work.
Similarly, HCLTech said that its AI Force platform had already been adopted by over 20 clients, with plans to scale to over 100 clients by FY26. HCLTech is also exploring agentic AI for employee productivity.
Infosys is also planning to increase its freshers intake to 15,000 in FY25. Additionally, it announced rolling out a 6-8% hike in February. HCLTech also plans to hire around 7,000 freshers. The two companies prove that the focus on AI can be achieved without reducing the headcount.
About 20-25% of fresher hiring in the IT sector is now targeted towards AI skills. This is an uptick from a dismal 5-10% over the last three years. But this has also resulted in the reduction of team size in the firms, affecting the overall headcount.
All of this is also while the debate around working 90 hours a week was started by L&T chairman SN Subrahmanyan, which according to many, is a recipe for attrition.
