IT rationalisation sparks a strategic reset for India’s staffing industry

Demand for repetitive or low-complexity roles like manual testers, data-entry operators and basic front-end developers has been reducing, as AI tools and low-code platforms now handle many of these tasks. 

Staffing firms are recalibrating their strategies amid the current phase of uncertainty and hiring freezes in the IT sector. With companies adopting a cautious approach to full-time recruitment, these firms are pivoting towards flexible, project-based and contract hiring models that offer agility to employers and opportunities for talent with niche skill sets.

By focusing on upskilling, and catering to demand from non-tech sectors such as BFSI, healthcare, retail and manufacturing, staffing firms are also turning a slowdown in traditional IT hiring into a period of strategic realignment and growth.

Roop Kaistha, Regional Managing Director, APAC, AMS, pointed out that global consultancies like Accenture have laid off thousands of employees unable to reskill in AI, while simultaneously planning to expand headcount in AI-focused domains. This dual trend—layoffs in traditional roles and hiring in AI—is mirrored in India’s IT sector. TCS, Infosys, Tech Mahindra and Wipro have collectively reduced over 30,000 roles as automation and AI integration take centre stage. TCS alone plans to cut 20,000 positions to embed AI into its operations.

Alongside, she noted that fresh graduate recruitment has dropped by over 50 per cent since 2019, with freshers now making up just 7 per cent of new hires at top tech firms. Companies are prioritising upskilling and hiring specialists over mass intake.

“Staffing and Recruitment firms in India are witnessing a rapid shift in their own business profile and talent required. Due to AI adoption, macro-economic changes are leading to lower volume hiring, changing candidate profiles and a deep pivot toward specialist skill acquisition. Core workforce and business statistics illustrate these changes with clarity,” she said.

While India’s job market is projected to grow by 9 per cent in 2025 with 5,00,000 new job opportunities, typical high-volume hiring has notably slowed, particularly in transactional and generic roles.

Aditya Narayan Mishra, MD and CEO of CIEL HR, noted, “The IT sector has been going through a phase of rationalisation rather than contraction. Companies are optimising for productivity, investing in automation and AI, and hiring selectively for high-impact roles, which is leading to fewer bulk intakes but stronger demand for specialised skills. For staffing firms, this is not a slowdown, but a shift. We are seeing robust activity in e-commerce, Retail, Manufacturing, FMCG, BFSI, Healthcare, GCC and EPC sectors. So while IT may be cautious, India’s overall employment engine is still running strong.”

Currently, 34 per cent of CIEL HR’s staffing business is focused on Tech Talent.

Neeti Sharma, CEO, TeamLease Digital, highlighted that in times of uncertainty, most companies like to hire talent on contractual roles, which gives them flexibility to hire on a project basis for shorter terms and attract candidates with niche skill sets. This is yet another opportunity for staffing companies, with demand for flexible roles in areas like AI, data and digital transformation remaining steady and even growing.

“In the short term, hiring volumes will not be high, but demand for niche skills continues to increase. Companies are willing to pay a premium for skills in AI/ML coding, Data Engineering, Data Science and Cybersecurity. Also, with digitilisation being the way forward, many non-tech companies are hiring tech talent for building internal capabilities along with partnering with IT companies for their overall digitilisation plans,” she said.

Demand for repetitive or low-complexity roles like manual testers, data-entry operators and basic front-end developers has been reducing, as AI tools and low-code platforms now handle many of these tasks. But this shift is being balanced by an increasing demand for roles that need human judgment, such as data validation, model governance, ethical AI oversight, and business integration.

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Published on November 7, 2025