Now with companies pivoting towards AI in a big way, this slowdown is likely to become more prominent, tightening the hiring safety net in India’s IT services sector
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xavierarnau
Mid-size IT companies moderated hiring in the December quarter as many reported higher revenue per employee driven by AI productivity.
In the latest quarter, mid-size firms Coforge, KPIT Technologies, Mphasis, Hexaware and LTIMindtree collectively reported half the net adds of the previous quarter; from over 4,000 employees in Q2 to over 2,000 employees in Q3. Firms like KPIT lessened workforce by 155 employees in Q3. Many officials attributed the slowdown to the advent of AI.
While these companies continue to perform better than large-cap firms that have been showing a downward trend in hiring for the past couple of quarters, the cautious approach now adopted by mid-caps indicates rising pressure for aspirants to prime their specialised AI-ready skills.
“Midcap companies are even more cautious when it comes to their hiring focussing on skill specialisation, cost of hiring, retention etc., signalling a shift from volume-driven hiring to only targeted, role-critical recruitment,” said Neeti Sharma, CEO, TeamLease Digital, which noted particular moderation in terms of net new additions and fresher intake, even as demand for specific skills continues to grow.
Dissociating people and revenue
Companies like KPIT and Coforge have publicly spoken about the impact of AI on hiring trends. Speaking to businessline, Kripa Hardikar, KPIT Technologies, Chief Financial Officer, said the company is disassociating the people-based revenue model to a transformation solution-based model in line with its AI ambitions.
“While we are recruting freshers, we are hiring a top critical talent pool. So fundamentally, already we are disassociating people and revenue. That association will no longer hold true moving forward,” she said.
Coforge too reported high revenue per employee, crossing $71,000 per annum, attributing it to the prominence of outcome-based contracts in recent quarters which increase both the revenue per employee and margins. In turn, it results in lower headcount addition as compared to revenue growth, said Saurabh Goel, Chief Financial Officer, Coforge Ltd.
In the midst of the hiring crunch in the IT industry, the mid-size firms were a safe haven for the mass of applicants looking for a job in the industry. However, even by the middle of 2025, Greyhound Research reported that tier-2 firms are beginning to slowdown hiring pipelines with sentiment among CHROs dropping from 44 per cent optimism in March 2025 to 23 per cent in just June 2025, due to macroeconomic uncertainty. Now with companies pivoting towards AI in a big way, this slowdown is likely to become more prominent, tightening the hiring safety net in India’s IT services sector
AI and workforce
Hexaware, which has increased net adds for the last few quarters, told businessline that the trend will continue for the company. At the same time, R Srikrishna, CEO of Hexaware, said, “It is true that for certain programmes, we will need fewer people than we did in the past because of AI, but we are still hiring people.”
According to TeamLease, AI is improving productivity per employee, which naturally suppresses volume hiring, even as it sustains strong demand for data, AI, cloud and platform engineering skills.
“While routine, execution heavy roles are moving to AI agents, the demand for specialised talent is increasing. The immediate reduction in hiring among mid-size firms is a combination of AI adoption and structural changes incorporated by the firms as part of their long-term strategic roadmap,” said Sharma.
Published on February 8, 2026
