India’s software exporters are pulling the brakes on hiring, spooked by macroeconomic volatility triggered by the global tariff war. Recruitment across the $280 billion industry dropped sharply in the first quarter of 2025, as companies adopt a cautious, quarter-by-quarter approach to hiring decisions.
According to data from Teamlease Digital, talent demand in the Indian tech sector fell 18–20% between January and March 2025, compared to the previous quarter. Xpheno data confirms that active hiring demand in IT services plunged to 55,000 in March, down from 80,000 in February.
Hiring Slowdown and Rising Uncertainty
The abrupt shift from Q4 2024’s optimism has left staffing firms scrambling. Industry leaders now worry about organic headcount reduction as companies may stop replacing employees lost to attrition (typically 12–16%).
“There is a likelihood of layoffs in the Indian tech industry, especially in the two largest cohorts of IT Services and GCCs,”
— Kamal Karanth, Co-founder, Xpheno
With the US imposing new country-wise tariffs (including a 245% levy on China and a 10% minimum global tariff), Indian firms exposed to North America and Europe are reassessing risks. Even though US President Donald Trump called for a 90-day pause after the April 2 announcement, the damage to sentiment is already visible.
Impacts Across the Board
- Wipro CEO Srini Pallia admitted to increased uncertainty and a more selective hiring approach.
- TCS CEO K Krithivasan revealed that delays in projects and decision-making began creeping in by March, despite a positive outlook earlier in Q1.
- Freshers may still see hiring in FY26, but wage hikes have been deferred.
Tech Startups & Product Firms Also Affected
The hiring squeeze isn’t limited to IT services. Software product startups are also scaling back. Xpheno reports a drop in hiring demand in this segment from 35,000 to 25,000 since late March. The tech sector’s contribution to overall job demand has declined from 45% to 40%.
Key Trends Emerging:
- Bulk hiring has seen a 10% YoY dip in Q1.
- Lateral hiring has slowed or paused altogether.
- Utilization rates in top IT firms have climbed to 83–85% as they try to extract more from existing resources.
- Mass layoffs are not imminent, but organic reduction via attrition is likely.
“Companies are taking a wait-and-watch approach… all hiring mandates are indeed being scrutinised.”
— Nitin Bhatt, Tech Sector Leader, EY India
Looking Ahead
Industry analysts predict that hiring restraint will continue into early FY26, especially if protectionist policies in the US fuel inflation and reduce discretionary tech spending. India’s tech giants are being forced to rethink strategy—not just to ride out short-term turbulence, but to recalibrate for a new global reality.
