As IT services firms deal with the rapidly changing marketplace as well as their own change in operating models, they are adjusting headcount, skills, and location.

Analysts said one of the most significant forces driving these changes is the hyper-competitive pricing environment and the need to cut costs to maintain profitability.

According to WARN Tracker.com, which provides layoff insights from public records, on March 27, 2026, HCL America filed a notice and informed that the layoff date would be May 26. Its data showed that 7.7 million employees have been laid off from Amazon, Google, Meta, Microsoft & 38,170 other companies from 1988 to 2026.

The WARN Act outlines requirements for employers who are performing large layoffs or office closures to notify employees, as well as state government officials, of these job losses at least 60 days in advance.

The layoff at HCL will start from May 29 and continue till the end of the year. Previously, in February, HCL filed a notice saying the layoff range would be 51 to 100 people and the layoff date would be April 20.

Reports suggest that apart from HCLTech, Florida, Texas, and Pennsylvania received notices from Hinduja Global Services and Infosys in the first three months of 2026. These notices do not necessarily imply layoffs, it can also be work transfers, reports added.

Talking about the changing marketplace, Peter Bendor-Samuel, Founder and Executive Chairman of Everest Group, told DH that the changes at HCLTech and other firms are a reflection of these forces. "The velocity of change makes this appear as if broad secular shifts are underway, which, at one level, is true, as the new AI-infused operating model takes hold. However, this is a bumpy journey. The current changes in numbers and skill mix are not an indication that there is a pullback from the market or that the fundamental offshore and onshore ratio is going to change. But more a factor of overall change and increasing needs to keep budget under control and margins acceptable," he explained.

Considering the present geopolitical environment and crisis, will clients give preference to AI transformation deals? Peter Bendor-Samuel said all major firms are asking their tech services partners to deliver the savings promised from AI. Hence, firms that do not have compelling capabilities or a strong vision of how AI will allow them to reduce costs and improve productivity are losing share. He said most clients are cautious about undertaking large transformations that change their business models.

Most are experimenting in tightly defended areas, but the long-awaited broad business transformation is yet to emerge.

"That is not to say that there are not first movers and some notable large transformational deals in the market, but they are few and unlikely to grow significantly for some time," he added.

During the company's earnings call, K Krithivasan, CEO and MD, TCS, said AI will enable clients to rapidly move from end customer feedback to demand identification to code. "Our clients are quite interested in leveraging AI. They know this will be constantly evolving, and there is no major benefit in waiting for the next best model to come," he said.

Analysts view FY27 as a mixed year for Indian IT services firms, with AI creating both headwinds and tailwinds in all the key sectors. "In the most important sector, SDLC (software development life cycle), we see a net headwind as AI compresses revenues before it opens substantial new scope in 3-4 years. This is the setting of a war for share, which is creating intense pricing pressure while also shrinking the overall TAM (total addressable market). In other sectors, we see AI creating a net tailwind, opening new scope faster than it compresses revenue. These areas are BPO, AI data centre construction and management, consulting, and others. This year will likely have flat to modest growth as the fight for share in the SDLS market unleashes intense pricing and business change while other areas create some much-needed lift," Peter Bendor-Samuel said.

According to Kapil Joshi, CEO of IT Staffing, Quess Corp, AI-led transformation is now becoming central to client strategy, and this is where he sees strong momentum building. "Clients are prioritising cost efficiency, automation, and productivity gains, leading to more focused, ROI-driven engagements. Sectors such as BFSI, manufacturing, and energy continue to show strong demand, driven by investments in digital and AI capabilities. While there may be 2-3% pricing pressure in traditional services, this is being offset by new opportunities, with AI expected to unlock a $300-400 billion market by 2030. Overall, the outlook for FY27 remains cautiously optimistic, with growth increasingly driven by AI, efficiency, and innovation-led transformation," he added.