More than 6 million people. Nearly $300 billion in annual revenue. Over 7% of India's GDP. That is what India's outsourcing industry built over 25 years, by putting an educated, English-speaking workforce to work doing tech tasks for Western companies at lower costs.
Now, according to a new report in the New York Times, AI is threatening to do to India what its outsourcing model did to the rest of the world.
Tata Consultancy Services has cut its headcount to 580,000, down more than 20,000 from its 2022 peak, the same year it hired 100,000 new employees in twelve months alone. Infosys has pulled back on hiring. Dozens of smaller firms laid off workers across 2025. On February 22nd, Citrini Research published a report that sent Indian tech stocks falling.
According to the report, "The entire model was built on one value proposition: Indian developers cost a fraction of their American counterparts." " But now "the marginal cost of an AI coding agent has collapsed to, essentially, the cost of electricity."
The impact is reaching university campuses. At R.D. Engineering College in Ghaziabad, graduate job placement dropped from 85% a few years ago to 75% today. In January, UK-based background check company Complygate ran a 10-day training program for nearly 100 students on campus. Roughly 10 received job offers.
In Gurugram, a startup called Hunar. AI is one example of how the displacement is happening. Its founder fed over four million minutes of recorded recruitment calls into a large language model built on OpenAI's products, training AI voice agents to handle the entire hiring process. His team went from 65 people to 45. He told the New York Times the number will fall to 25 or fewer as the business grows, and that by his estimates, the company has already eliminated 1,000 HR jobs, with a target of 10,000 by the end of the year.
Nasscom president Rajesh Nambiar told the New York Times that "if you're a young engineer getting out of university, I'd be worried. It's not going to be pretty out there."
Deedy Das, a partner at Menlo Ventures, said in the same New York Times report that "Markets are pretty efficient. If a tool exists that does a job cheaper, it will be adopted."
Damilare Odedina
The Same Trend Is Playing Out Globally
On February 27, 2026, Block Inc., the company behind Square and Cash App, announced it is cutting its workforce from over 10,000 to just under 6,000. More than 4,000 employees are affected. The company posted a Q4 2025 gross profit of $2.87 billion, up 24% year-over-year.
CEO Jack Dorsey shared the memo he sent to employees directly on X: "We're already seeing that the intelligence tools we're creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company. And that's accelerating rapidly."
Dorsey said he chose to act now rather than cut gradually: "I had two options: cut gradually over months or years as this shift plays out, or be honest about where we are and act on it now. I chose the latter."
Workers leaving Block receive 20 weeks of base pay, one additional week per year of tenure, equity vested through the end of May, six months of health coverage, and $5,000 toward transition.
Damilare Odedina
