Layoffs or Hiring: America-China Tariff War Sends Indian IT companies in ‘wait-and-watch’ mode

Indian IT firms are slashing hiring mandates and adopting a cautious approach as the America-China tariff war fuels economic uncertainty. As reported by Economic Times, the $280 billion industry, which heavily relies on North American and European markets, has seen demand for tech talent drop by nearly 20% in the first quarter of 2025 compared to the previous quarter.
Recruitment firms report that IT services companies have reduced active hiring demand from 80,000 in February to 55,000 in April. Experts warn that layoffs could follow, particularly in IT services and Global Capability Centers (GCCs), which employ 70% of India’s tech workforce.
Kamal Karanth, co-founder of Xpheno, told Economic Times, “There is a likelihood of layoffs in the Indian tech industry, especially in IT services and GCCs.” He added that companies may stop replacing employees, leading to organic headcount reductions.
The hiring slowdown follows US President Donald Trump’s tariff announcements, including a 10% minimum tariff on all trade partners and a 245% levy on Chinese imports. While Trump called for a 90-day pause on April 9, the uncertainty has already impacted India’s top IT firms.
Wipro CEO Srini Pallia acknowledged the growing concerns, stating, “The uncertainties have dramatically increased. We don’t want to onboard people and then face challenges in deploying them.” Similarly, TCS CEO K Krithivasan noted that project delays and decision-making slowdowns have emerged since March.
Industry leaders expect continued caution in hiring, with firms focusing on backfilling critical roles rather than expanding their workforce. TCS has deferred wage hikes, signaling a conservative approach amid the economic turbulence.