The model that built modern outsourcing, moving repeatable work to a cheaper time zone, is starting to break. And the people running it are the ones saying so out loud.
At TCS's annual meeting on June 9, Tata Sons chairman N. Chandrasekaran told shareholders the company will soon run as many AI agents as it employs people. TCS is India's largest IT services firm and the backbone of a roughly $250 billion offshoring industry. When its chairman frames AI as the new headcount, the labor arbitrage that defined the last twenty years is running out of road.
The hiring data has been telling the same story for a while. India's three biggest IT firms (TCS, Infosys, and HCLTech) collectively shed more than 80,000 jobs between 2023 and 2025, according to research published in Frontiers. Annual IT sector hiring in India peaked at 400,000 in 2022 and dropped to roughly 100,000 in 2024. That's a 75% collapse in two years, mostly absorbed by entry-level roles. India's own government body, NITI Aayog, now projects up to 2 million tech jobs at risk from AI-driven demand erosion.
The pressure is showing up well beyond India:
- Banks: Major lenders are laying groundwork for mass workforce cuts as AI moves into operations, according to Bloomberg. A lot of that work currently sits in offshore back offices.
- Global Business Services: A Hackett Group study of GBS leaders found the firms expected to come out ahead are the ones using AI to rethink workflows from the ground up, not the ones bolting it onto what already exists.
- US labor data: Goldman Sachs Research estimates AI has trimmed monthly US payroll growth by roughly 16,000 jobs over the past year, with younger and less experienced workers taking most of the hit.
What ties these together is the type of work being eliminated. Routine coding, testing, customer support, basic financial analysis. Those are the categories companies have spent decades shipping abroad because they were standardized and could be done at scale by a junior workforce. They're also the categories AI handles best.
Goldman's CIO Marco Argenti, who ran technology at AWS before joining the bank, told the firm that "in my 40 years in technology, 2025 saw the biggest changes I have seen in my career", and that 2026 will be bigger. Goldman economist Joseph Briggs estimates 300 million jobs globally are exposed to AI automation, with 6 to 7% of workers likely to be displaced during the transition.
The US entry-level story is genuinely messy. Domestic hiring has been distorted by interest rates, post-pandemic overhiring, and a dozen other things, so it's hard to isolate AI as the cause. The offshoring story is cleaner. The whole point of offshoring was to do high-volume, structured work cheaper. AI is now cheaper than the cheap labor, available around the clock, and doesn't need three years of training to be useful.
: The firms running offshore operations aren't going to announce the model is dead. They're going to quietly stop hiring at the bottom while pitching themselves to clients as AI transformation partners. TCS already is. The next two years will sort the firms that can pivot to running AI for their clients from the ones still selling seats at desks. For the workers in those seats, the path forward isn't waiting for the old jobs to come back. They aren't.
