Nine of India’s top ten software services firms, employing more than 2 million engineers, have seen their workforce shrink in the six months to 30 September, the first time in more than 25 years, as clients in the US and Europe cut spending amid rising economic and geopolitical risks, reports Mint. A Mint analysis showed that the 10 largest companies, including giants such as Tata Consultancy Services Ltd and Infosys Ltd, along with smaller firms such as LTI Mindtree Ltd and Persistent Systems Ltd, saw their workforce fall to 2.06 million people at the end of September from 2.11 million at the beginning of the fiscal year, resulting in a loss of 51,744 jobs.

The IT services industry has been grappling with slowing growth as clients cut back on discretionary spending amid high interest rates and military conflicts in Ukraine and West Asia. Simultaneously, the rise of disruptive technologies such as generative artificial intelligence (AI) has raised fears that much of the work done by engineers now will be automated, posing an existential threat to the country's $245 billion outsourcing industry. L&T Technology Services Ltd, the smallest among the 10 companies, bucked the trend by expanding its workforce by 32 people in the last six months for a total of 22,625.

"These are testing times for IT behemoths," said Sunil Chemmankotil, chief executive of staffing firm TeamLease Digital. "Changing deal types, pressure on margins, and looming uncertainty leave very few options for them when it comes to the talent strategy. It's going to be a lower headcount than where we started this year. Maybe, it's time to consider newer talent options like staffing and gigs along with latest productivity-increasing technologies."

Earlier this month,Infosys, Tech Mahindra,TCS, and Wipro reported decreases in headcount.