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India's software services sector has a new hiring playbook - expand the entry level workforce, equip them with AI tools and cut the middle managers. Lateral hiring volumes at tier-1 IT firms including Tata Consultancy Services (TCS), Infosys, Wipro, HCLTech, TechMahindra and LTM declined by 0.5%-6% in FY26, even as these companies stayed committed to their fresher intake, according to data from staffing firm Xpheno.
Margin pressures and rising AI bills are making fresher hiring more attractive compared to expensive lateral talent, experts noted.
The number of lateral talent across the tier-1 players dropped by 31,500 during FY26, Xpheno shared.
Cognizant on Wednesday said it will lay off people under Project Leap that will cost between $230-320 million in severance costs. However, the company committed to hire 20,000 freshers.
TCS hired 40,000 freshers last fiscal - the highest for any private employer ever - while laying off 12,000 mid-to-senior layers.
Accenture cut 22,000 mid-tier roles globally with an aim to generate $1 billion in annual savings and reinvested in an AI specialist bench. Infosys has committed to hire 20,000 freshers in FY27 though the company does not plan to undertake any layoffs. LTM is targeting new campuses for hiring freshers in FY27 while going slow on lateral backfills.
"The urgency to retain or expand capacity in the lateral layers is lesser, compared to the need to control costs and handle margin pressures amidst sustained headwinds," explained Kamal Karanth, founder Xpheno, adding that these companies already has a big-fat middle layer due to post-pandemic buoyancy. The shift is driven by a structural move toward productivity-led growth rather than volume hiring, said Kapil Joshi, CEO of IT Staffing at Quess Corp.
"Companies are now able to maintain stable revenues with flat headcount, as revenue per employee has increased by 5-8% in FY26."
Margin pressures and rising AI bills are making fresher hiring more attractive compared to expensive lateral talent, experts noted.
The number of lateral talent across the tier-1 players dropped by 31,500 during FY26, Xpheno shared.
Cognizant on Wednesday said it will lay off people under Project Leap that will cost between $230-320 million in severance costs. However, the company committed to hire 20,000 freshers.
TCS hired 40,000 freshers last fiscal - the highest for any private employer ever - while laying off 12,000 mid-to-senior layers.
Accenture cut 22,000 mid-tier roles globally with an aim to generate $1 billion in annual savings and reinvested in an AI specialist bench. Infosys has committed to hire 20,000 freshers in FY27 though the company does not plan to undertake any layoffs. LTM is targeting new campuses for hiring freshers in FY27 while going slow on lateral backfills.
"The urgency to retain or expand capacity in the lateral layers is lesser, compared to the need to control costs and handle margin pressures amidst sustained headwinds," explained Kamal Karanth, founder Xpheno, adding that these companies already has a big-fat middle layer due to post-pandemic buoyancy. The shift is driven by a structural move toward productivity-led growth rather than volume hiring, said Kapil Joshi, CEO of IT Staffing at Quess Corp.
"Companies are now able to maintain stable revenues with flat headcount, as revenue per employee has increased by 5-8% in FY26."
