India’s tech industry, led by giants like Infosys, TCS, and Wipro, has been a global success story, driving economic growth and creating millions of jobs. But the shine is fading. Revenue growth is stalling, stocks are tumbling, and layoffs loom large. TCS reported its weakest expansion in four years. Infosys profits fell 12%. Wipro’s earnings have reached a low not seen since the pandemic in 2020. Is automation putting pressure on the sector? Are U.S. trade policies from the Trump administration to blame? The reality is a combination of global challenges and internal missteps. India’s leading technology company is at a crossroads, but it’s not too late to forge a new path forward.

A Financial Wake-Up Call

The numbers paint a grim picture. TCS, the industry leader, posted just 2.3% revenue growth in 2024, its lowest in four years. Infosys saw profits drop 12% year-over-year, projecting a meager 1-3% rise for 2026. Wipro’s revenue fell 4.5%, its worst performance outside the COVID slump. In Q2 2025, the top five Indian IT firms collectively lost $10 billion in market capitalization, according to BSE data. Hiring has stalled, with entry-level roles nearly nonexistent. New graduates face onboarding delays of up to six months. Salary hikes? TCS and Infosys have deferred them indefinitely.

This isn’t just belt-tightening. The U.S., which generates 60% of India’s tech revenue, saw $5.1 billion in IT contracts canceled or delayed in 2024. American firms, wary of economic uncertainty, are scaling back. Trump’s 2025 tariffs on foreign tech goods—adding 10-20% duties—have raised costs, making Indian outsourcing less attractive. A Nasscom report estimates these tariffs could shave 2% off Indian IT exports by 2026. The financial hit is real, but it’s amplifying deeper flaws.

Automation Upends the Old Model

Technology is moving fast, and India’s tech firms are scrambling to catch up. In 2025, U.S. tech giants cut 32,000 jobs, per Layoffs.fyi, with firms like Google and Amazon replacing workers with automation tools. Indian companies, built on large teams managing legacy systems, face the same challenge. Clients now demand solutions powered by machine learning or cloud platforms, not armies of coders. For example, JPMorgan Chase reduced its reliance on Indian vendors by 15% in 2024, opting for in-house AI tools, per Bloomberg.

India’s tech model—scaling workforces to handle routine tasks—is under siege. The sector employs 5.4 million people, but automation threatens 20% of these roles by 2030, according to McKinsey. To compete, firms must retrain workers for advanced skills like AI development. Automation isn’t the only issue, but it’s exposing a failure to adapt.

Trump’s Tariffs: A Sting, Not a Knockout

In 2025, Trump’s trade policies were reintroduced and had a significant impact. His tariffs on technology imports are designed to support U.S. industries; however, they also increase costs for American companies that outsource to India. The U.S. Chamber of Commerce has warned that these tariffs could lead to a $20 billion annual reduction in IT spending, with India experiencing 30% of the consequences. As budgets become tighter, U.S. firms are postponing projects or looking for cheaper alternatives.

But tariffs aren’t the root cause. India’s heavy reliance on the U.S. market—60% of revenue—left it vulnerable. Nandan Nilekani, Infosys co-founder, noted in a 2025 CNBC interview that the industry’s failure to diversify markets over decades is now a “strategic liability.” Tariffs are a hurdle, but the sector’s lack of foresight set the stage.

Complacency Built a Fragile Empire

Sridhar Vembu, CEO of Zoho, delivers a sharp diagnosis: India’s tech industry rode a bubble for too long. It thrived on low-cost services—fixing software, running call centers, maintaining old systems. These generated billions but added little unique value. Vembu argues the sector absorbed India’s brightest minds, who could have built infrastructure or pioneered new technologies, only to churn out repetitive work.

Vembu’s view echoes Goldman Sachs analyst Priya Sharma, who told Reuters in 2025 that Indian IT firms “over-invested in headcount while under-investing in innovation.” Bloated teams and outdated models have left companies exposed. For instance, TCS’s employee count grew 10% from 2020 to 2024, but revenue per employee dropped 8%, per company filings. Startups now offer nimbler solutions, and countries like Vietnam are gaining as cheaper outsourcing hubs. The Philippines captured 12% of global IT outsourcing in 2024, up from 7% in 2020, according to Gartner. Vembu sees this as the start of a painful correction.

Global Headwinds and New Rivals

The global economy is unforgiving. U.S. recession fears, fueled by 4% inflation and 5% interest rates, have cut IT budgets by 8% in 2025, per IDC. American tech giants are laying off workers and freezing projects, hitting Indian vendors hard. Microsoft, for example, slashed $2 billion in outsourcing contracts, 40% of which were with Indian firms, per The Economic Times.

Competition is more intense than ever. Startups are disrupting the market with agile, cloud-based services. Indian startup Freshworks, valued at $6 billion in 2025, has doubled its U.S. client base by offering AI-driven customer support tools. Other countries are narrowing the gap, with Vietnam’s IT exports growing by 15% in 2024. lower costs and government incentives helped in achieving this, according to Statista. India’s dominance as the outsourcing hub is diminishing.

Reinvention: A Roadmap Forward

India’s tech giants must act decisively. Cost-cutting and retraining are underway, but they’re not enough. Here are three actionable steps to reclaim relevance:

• Build Products, Not Just Services: Move beyond “code for hire.” Wipro’s $250 million investment in AI-driven healthcare platforms in 2025 is a model—its AI diagnostics tool now serves 50 U.S. hospitals, per company reports. Firms should develop proprietary software or platforms to compete globally.
• Diversify Markets: Focus on Europe and Asia. Reduce reliance in US market. TCS’s 2025 expansion into Japan, which includes securing $1 billion in contracts with Toyota and Sony, shows promise according to Nikkei Asia. Additionally, India’s domestic market, growing at 10% annually, represents another untapped opportunity.
• Invest in Future Tech: Embrace AI, cloud computing, and quantum tech. Infosys’s partnership with Google Cloud to train 20,000 engineers in AI by 2026 is a step forward, per a 2025 press release. This builds skills and signals innovation to clients.

Keeping talent is critical. Layoffs risk long-term skill gaps. TCS’s 2025 reskilling program, training 50,000 workers in cloud tech, balances cost control with growth, per Mint. Diversifying and innovating aren’t just buzzwords—they’re survival tactics.

A Call to Reclaim the Future

India’s tech giants face a brutal truth: their old model—built on cheap labor and U.S. contracts—is broken. Automation, tariffs, and global competition have exposed weaknesses, but complacency dug the hole. Blaming external forces won’t help. As Debjani Ghosh, Nasscom president, said in a 2025 Forbes interview, “This is India’s chance to lead, not follow. We must create, not just execute.”

The sector still has strengths: 5.4 million skilled workers, a global reputation, and deep experience. But time is short. By 2030, India could lose 15% of its IT market share to rivals if it doesn’t act, per EY. This crisis is a chance to rebuild smarter—focusing on innovation, new markets, and cutting-edge tech. India’s tech industry must seize this moment. The world needs solutions, and India can deliver—if it dares to lead. Let’s not just save the crown jewel. Let’s forge a new one.