TCS Layoffs Fallout: ‘End of Sholay Era,’ NASSCOM Warns of ‘Reset’ as Govt Watches Closely

Date/Location: July 28, 2025 – New Delhi, India

The TCS layoffs fallout has intensified, moving beyond a single company’s decision to spark a nationwide debate about the future of India’s IT sector. The move has drawn sharp commentary from industry veterans, an official warning from NASSCOM about further “workforce rationalisation,” and has now attracted the attention of the central government, with the IT Ministry reportedly keeping a “close watch” on the situation.

1. Detailed Overview of the Industry-Wide Reaction

The decision by India’s largest IT employer to cut 12,000 jobs is now being seen as a bellwether for a painful, industry-wide transformation.

• The “End of the Sholay Era”: In a widely circulated and powerful analogy, former Tech Mahindra CEO CP Gurnani described the layoffs as the “end of the Sholay era.” He referenced the iconic dialogue “Kitne aadmi the?” (How many men were there?) to explain that the old IT model, which was built on massive headcounts and linear growth, is now obsolete. “The question is no longer ‘how many people do you have?’ but ‘what can your people do with AI?'” he stated, perfectly capturing the industry’s paradigm shift.
  • Source: Hindustan Times
• NASSCOM’s Official Warning: The National Association of Software and Service Companies (NASSCOM), the industry’s apex body, has issued a formal statement warning of further “workforce rationalisation.” The body stated that the industry is undergoing a “major reset” where legacy IT skills are becoming redundant due to AI, and that more companies will likely realign their workforce.
  • Source: Moneycontrol
• Government Scrutiny: The scale of the layoffs has now attracted government attention. According to NDTV, the Union IT Ministry is “keeping a close watch” on the situation. While not intervening directly at this stage, the ministry is monitoring the issue due to its potential impact on the wider economy and workforce.
  • Source: NDTV

2. The Deeper Story: A Structural Reset, Not a Cyclical Downturn

The analysis from industry leaders and bodies makes it clear that this is not a temporary slump but a permanent, AI-driven change.

• The Obsolescence of Legacy Skills: NASSCOM’s warning about a “reset of legacy skills” is the most critical takeaway for the IT workforce. This refers to roles in manual software testing, basic application maintenance, and entry-level coding, which are now being rapidly automated by Generative AI tools. The demand for these skills is shrinking, and companies are no longer hiring large numbers of freshers for these roles.
• From Headcount to “Skill-Count”: CP Gurnani’s “Sholay” analogy perfectly explains the new business model. In the past, an IT company’s strength was measured by its number of employees. Now, its strength is measured by the quality of its AI-skilled workforce and the intellectual property it creates.
• The Government’s Dilemma: The IT Ministry’s “close watch” highlights a major challenge for the government. The IT sector has been a massive job creator for decades. A structural shift that leads to lower net hiring poses a significant challenge to national employment goals and requires a policy-level response.

Read Also:

• The Original Report: TCS Layoffs to Impact 12,000 Employees in Major Workforce Cut
• The AI Arms Race: How Google and Cognition’s Deals are Reshaping the Tech Sector

3. Evidence-Based Support: The Voices of the Industry

The evidence of this structural shift comes directly from the statements of the industry’s most influential voices.

• Quote from CP Gurnani (Former CEO, Tech Mahindra): “For years, our answer to clients was, ‘I’ll put 500 people on it.’ That was the Sholay era… Now, the answer is, ‘My AI will do it with 5 people.'”
• Quote from NASSCOM Statement: “The industry is undergoing a necessary workforce rationalisation. There will be a major reset of legacy IT skills as the demand shifts towards expertise in Artificial Intelligence, data science, and cloud engineering.”

Conclusion: A Turning Point for Indian IT

The TCS layoffs fallout has confirmed that the Indian IT industry is at a historic inflection point. The commentary from industry leaders, the official warnings from NASSCOM, and the scrutiny from the government all point to the same conclusion: the old model is broken. The era of mass hiring for legacy skills is over, and the future belongs to a smaller, more highly skilled workforce that can leverage the power of AI. This is a painful but necessary transition for an industry that must evolve to stay globally competitive.

Accountability Summary:

• IT Companies are accountable for managing this transition humanely, investing heavily in reskilling their existing workforce wherever possible.
• NASSCOM and the Government are accountable for creating a national-level strategy to manage this workforce transition, which includes reforming engineering education and promoting large-scale upskilling initiatives.
• IT Professionals are ultimately accountable for their own careers. They must proactively embrace lifelong learning to stay relevant in the age of AI.

Urgent Actions Needed:

1. A National Reskilling Mission: The government, in partnership with NASSCOM and the industry, needs to launch a massive, mission-mode project to reskill lakhs of IT workers in AI, data science, and other emerging technologies.
2. Curriculum Overhaul: Engineering colleges must urgently overhaul their curricula to move away from teaching legacy skills and focus on the technologies that are in demand today.
3. Individual Action: For every IT professional, the urgent message is to start learning about and experimenting with AI tools immediately.