Written by: Deep Tide TechFlow

52-year-old Indian engineer Shiv still maintains a habit: to send out at least 5 resumes every day.

This persistence began in April this year. In March, American software giant Oracle laid off 12,000 people in India, and he was one of them. After working at this company for 14 years, he thought he would stay until retirement. Now, he still has to pay 50,000 rupees a month in rent; his family has lived in the same house for 15 years, and he doesn’t want them to move. One evening, he realized without reason that he had lost his temper at his wife.

In an interview with India's Outlook magazine, he said, “The technology was built by us, we learned it and developed it. After they used it up, they let us go.”

In the same round of layoffs was 25-year-old Priyanka. That morning she woke up to go to the gym and casually checked her email, only to coldly find a notice that she was laid off. She is carrying two installment debts, one for an iPhone and one for an electric scooter, totaling 20,000 rupees a month. She is using her savings to get by, just to stay in Bangalore.

Zooming out, behind Shiv and Priyanka is a rarely seen national-level short-selling reckoning, and the country being shorted is India.

The world's purest AI short target, in Mumbai

If one were to find a trading target in the global market that most purely expresses the narrative of “AI replacing human white-collar workers,” the answer lies both in the bull list of Nasdaq and the bear list of the Mumbai Stock Exchange. The former is NVIDIA, and the latter is the Indian Nifty IT index.

A glance at this index's trajectory in 2026 is like a judgment being executed line by line.

The Nifty IT index reached a historic high of 46,089 points on December 13, 2024, and by the end of June this year, it has retracted 43%.

In the first half of 2026, this index fell about 30%, being the worst-performing sector in the Indian market, while the Nifty 50 index only fell about 9% during the same period. The four major Indian IT giants—TCS, Infosys, Wipro, and LTIMindtree—have retracted about 50% from their respective peaks, with the combined market value evaporating by approximately 19.28 trillion rupees, equivalent to over 20 billion US dollars. TCS's market value has already fallen below 10 trillion rupees.

What’s more intriguing is the cadence of the decline. Each large bearish candlestick almost corresponds to the last US-based AI company's press conference.

On February 4, Anthropic released a new generation programming tool claiming to automate most of the exploration and analysis work in legacy system transformation. Modernizing COBOL systems has been a solid business for the Indian outsourcing industry for decades. When this news reached Mumbai, the IT sector began a sell-off, subsequently dropping more than 15%, evaporating 5.08 trillion rupees.

In May, OpenAI announced an investment of over 4 billion dollars to form a "premise deployment engineer" team, directly entering corporate clients to reconstruct workflows around AI. The market immediately understood the underlying message: high-value consulting, deployment, and transformation projects may now bypass Indian service providers. The Nifty IT index dropped to its lowest point since May 2023.

In June, Accenture plummeted nearly 18% in a single day, marking its largest single-day drop since its listing. The next day, at the Mumbai opening, Nifty IT fell by 6%, and Infosys dropped by 8.19% to a five-year low, causing an evaporation of 1.35 trillion rupees in one trading day. The clients served by Accenture are exactly those European and American banks, retailers, and manufacturers that Indian IT companies serve.

The sellers' attitude is also turning.

Investment bank Jefferies warned that in the worst-case scenario, Indian IT stock valuations could still drop by 30% to 65%. Citrini Research's report anticipates that contract cancellations for TCS, Infosys, and Wipro will continue to accelerate before 2027. Local brokerage Nirmal Bang downgraded TCS from buy to sell, cutting the target price from 3,046 rupees to 1,693 rupees.

Bloomberg data shows that the combined weight of the five major IT companies in Nifty 50 has fallen below 7.6%, the lowest since 2002. The capital market is betting with real money: global investors are systematically bearish on a country's pillar industry.

The essence of the Indian model: wholesale junior engineers to the world

To understand why India is the most affected in the AI era, one must first understand what the Indian IT industry is actually selling.

The answer is quite simple: engineer labor hours charged by the hour.

The Y2K crisis at the end of the last century gave India its first pot of gold, and for the next thirty years, this model grew bigger and bigger. Clients are in New York or London, while the code is written in Bangalore or Hyderabad; for the same work, Indian engineers quote a fraction of what their American counterparts do. Labor arbitrage is the only secret that keeps this $283 billion industry running.

This model created an unprecedented class in India. Neeti Sharma, CEO of TeamLease Digital, summed it up well in an interview with Outlook: “The logic is simple, you take out a loan of four to five hundred thousand rupees to finish your engineering degree, get into TCS, Infosys, or HCLTech, and you’re set for life.”

An engineer named Pooja is the perfect sample of this logic: she grew up in a single room in the suburbs of Kolkata, with nearly 70 people sharing one bathroom. After graduating in 2005, she went to Gurgaon to work as a programmer with an initial salary of 7,056 rupees a month; now, she earns 3.5 million rupees a year at a leading IT company.

A joint study by Nasscom and Crisil shows that by 2007, every IT job could create about four jobs in other sectors of the economy, such as drivers, security guards, cooks, and domestic workers. The proportion of housing loans in India’s GDP has increased from 0.6% in 1995 to about 11% today, with 35% concentrated in the South, where IT hubs are found. The entire real estate market in Bangalore and Hyderabad is almost pinned to the payroll of IT white-collar workers.

The problem is, the goods this model sells have a precise name: the repetitive labor of junior and mid-level engineers.

Writing template code, doing manual testing, maintaining legacy systems, handling tickets... and large models just happen to be the perfect substitutes for this type of labor; they are marginal cost nearing zero, available 24/7 without rest, and will never require or receive a visa.

In thirty years, India has transformed itself into the world's largest power to "replace American programmers." Now, what’s ending it is something even cheaper that can "replace Indian programmers," AI.

The dragon-slaying boy did not turn into an evil dragon; instead, he was swallowed by a new dragon.

A ten-year script for the middle class, torn apart in three years

A collapse is accelerating into reality.

TCS announced layoffs of 12,000 people last July, accounting for 2% of the total workforce, marking the largest layoff in the history of India's largest private employer. A 45-year-old employee from Kolkata told Reuters, “This is devastating news; for someone my age, finding a new job is too difficult.”

Even more absurd is that more than 500 job seekers who received TCS offers, with start dates listed as July 2025, are still indefinitely waiting for onboarding, many of whom have already left their previous jobs.

Apart from layoffs, the recruitment engine has stalled.

The top five IT companies in India had a net reduction of about 7,000 employees in the fiscal year ending March 2026, while the previous year saw a net gain of over 12,000. Over the past five years, these five companies have recruited an average of about 230,000 people annually, but in FY26, the number has dropped to just 170,000. TCS’s campus recruitment plan was cut from an average of 40,000 over the past three years to 25,000.

Founder of market intelligence company UnearthInsight, Gaurav Vasu, estimates that 400,000 to 500,000 IT professionals face the risk of layoffs in the next two to three years, with 70% being the core workforce with 4 to 12 years of experience.

Fund manager Saurabh Mukherjea has calculated a larger figure: India produces about 3 million engineering graduates each year, of which about 1.5 million are considered “qualified engineers.” Before 2020, these 1.5 million were almost completely absorbed by the IT services industry. Over the past three years, that number has dropped to nearly zero. Meanwhile, a report from Azim Premji University’s "2026 India Employment Status Report" shows that the unemployment rate for graduates aged 15 to 25 has reached 40%.

Shockwaves are reversing along the paths where wealth was once spread.

In the first quarter of 2026, residential sales in major Indian cities fell 13% year-on-year, with analysts directly naming IT layoffs as one of the main reasons. Shared apartments in Bangalore suddenly became hard to fill, with landlords attributing the blame to IT companies. Mukherjea also observed a dangerous signal: a large number of people sensing that they may be laid off are rushing to apply for personal loans and home loans before becoming unemployed; in the past 12 months, part of the loan growth in India has come from these “doomsday loans.”

So, what about leaving India to work in the US?

Sorry, that route is gradually being shut down by Washington.

In September 2025, the Trump administration temporarily raised the H-1B visa fee from 5,000 dollars to 100,000 dollars, a twenty-fold increase. Two months earlier, Trump publicly urged Google and Microsoft to “stop hiring in India.”

In 2024, Indians received over 200,000 US work visas, with Indian companies accounting for 20% of all H-1B approvals; this channel was once an extension of the Indian IT model into the physical world.

About 60% of Indian IT industry revenue comes from the US market, nearing 135 billion dollars. Now, India faces a double strangulation structure. AI has given American companies for the first time a technological option for “service re-shoring,” eliminating the need to send work to Bangalore; new visa policies have also ensured that Indian engineers find it difficult to send themselves to the US.

People can't get out, and work can't get in.

What’s even scarier is that the major reckoning brought by AI is still ongoing.

India has a median age of only 28 years, and in the next twenty years, tens of millions of young people will enter the workforce every year.

The demographic dividend is a check with an expiry date; if it is cashed, India will be the next great nation; if it cannot be cashed, the same group of young people will shift from the left side of the balance sheet to the right side.

A grain of dust from the era, falling on an individual’s head, becomes a mountain. Shiv is still sending out his five resumes every day, and the office buildings in Bangalore remain brightly lit; however, for the first time, the people inside are beginning to seriously contemplate how long those lights will stay on and for whom they shine.