Synopsis
India's top IT companies are changing how they hire. They are bringing in more fresh graduates and giving them AI tools. Middle managers are being reduced. This move aims to control costs and improve efficiency. Companies are focusing on productivity growth. Revenue per employee is increasing. This strategy is shaping the future of the IT sector.Listen to this article in summarized format
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. AI is a key factor here, contributing to 30-50% of productivity gains through automation in coding, testing, and operations,” he said, adding that companies are moving toward leaner, more agile teams.
However, specialised lateral hiring in AI, cloud, and cybersecurity roles rose from 38% to 52% in 2025, and reached nearly 60% in Q4, data from Quess showed.
Companies are also seeking freshers with AI skills.
Neeti Sharma, CEO at hiring firm TeamLease Digital, said specialised freshers with AI/cloud skills are now commanding salaries of Rs 7-8.5 lakh per annum, signalling a shift toward building capability at the base rather than backfilling mid-level roles, she said.
Pranshu Upadhyay, head of India technology practice at global recruitment firm Michael Page, said the more important shift is in how companies are measuring value. “Hiring decisions are increasingly being driven by return on investment, not just direct cost. Campus talent brings agility and a natural aptitude for learning, and organisations are capitalising on that by investing in upskilling, particularly in modern tools and technologies,” he said.
