Indian IT Firms Plan to Cut Bench Strength to 8-10% in FY27 as AI Reshapes Hiring

India’s top IT services companies — including TCS, Infosys, HCLTech, Wipro and Tech Mahindra — have sharply reduced their bench strength over the last three years. It has now dropped to single digits, or at most 12%, as firms restructure to adapt to AI-driven changes and boost employee utilization.

This is well below the pre-AI average of 20-30%, according to data from staffing firm TeamLease Digital. In IT, “bench” refers to employees on payroll who are not assigned to any active client project. They are typically kept as backup for sudden demand.

By FY27, TeamLease expects the average bench to fall further to 8-10%. Some firms may run even leaner. Bench duration has also shortened from 45-60 days earlier to 30-45 days now.

“The bench is much leaner than before… Hiring is now demand-led and focused on niche skills. Companies are using AI, better workforce planning and stronger forecasting to improve utilization instead of keeping large standby teams,” said Neeti Sharma, CEO, TeamLease Digital.

Shift to AI, Cloud and Cyber security Skills

Hiring has become selective. Demand is now concentrated in AI, cloud, cyber security and data roles, not broad-based tech jobs. The focus is on hiring for confirmed projects instead of building large benches.

“Companies want a ‘relevant’ workforce that is AI-skilled and deployment-ready,” said Sumit Pokharna, VP – Fundamental Research, Kotak Neo. “Utilization rates are very high right now. Keeping a tight workforce is the only way to manage topline and revenue pressure from AI-led deflation. Otherwise it becomes a margin issue.”

What About Layoffs?

Employee utilization improved sequentially in Q1FY27 for most firms. But year-on-year, it has slowed. Data from Xpheno shows net utilization dropped from 87.1% in AMJ 2024 to 86.1% in AMJ 2025, and to 85% in AMJ 2026.

“Bench and utilization depend on client demand and order books. AI is driving up skilling and capacity building for new skills,” said Francis Padamadan, CEO, Xpheno.

Experts say firms are prioritizing reskilling over layoffs. “Companies are investing in up skilling to redeploy people to new projects. Where redeployment isn’t possible, excess capacity may be let go. This is more about reshaping the workforce than cutting headcount,” Sharma said.

Padamadan added that most excess capacity was already shed after the post-pandemic hiring boom. “There isn’t much flab left unless AI investments start replacing roles quickly.”

Hiring Sentiment Improves

Most IT firms signaled a hiring restart this quarter. Wipro was the exception. Even Tech Mahindra, which paused campus hiring last year, said it will resume fresher recruitment.

Companies are also building “forward deployed engineers” or FDEs.

• TCS is pushing project-based learning to improve deployment readiness.
• Infosys plans to hire about 6,000 frontier engineers in the next few years.
• HCLTech is focusing on a small group of “elite cadre” freshers who will become FDEs in 2-3 years.

“Campus hiring was volatile due to revenue visibility issues. Now visibility is better, so campus programs should restart,” said Tech Mahindra CEO & MD Mohit Joshi.