Will Donald Trump’s tariffs lead to mass layoffs in India’s IT sector? -

New Delhi – U.S. President Donald Trump has stirred global markets with his aggressive tariff strategy, raising alarms in India’s IT (Information Technology) sector.

Trump’s recent decision to impose new tariffs on India, citing unfair trade practices, could spell trouble for the country’s tech industry.

Under the new measures, a baseline tariff of 10% will apply to all countries, with Indian goods entering the U.S. facing an even steeper 26% duty.

According to a March 25 report by MK Global, a 25% broad-based tariff could potentially slash $31 billion from India’s GDP—about 0.72% of the total GDP.

This is particularly concerning as the U.S. remains India’s largest export market, with total exports reaching $77.5 billion in FY24.

Speaking at the “Make American Wealthy Again” event in the Rose Garden, Trump criticized India’s trade policies. “India is very tough.

The Prime Minister was here recently and he’s a good friend, but they’re not treating us fairly. They charge us a 52% tariff while we take almost nothing from them,” Trump said.

Hiring slowdown in IT amid tariff uncertainty

While tariffs directly impact trade in goods, India’s IT sector—which is one of the largest service exporters to the U.S.—is also feeling the strain.

Already grappling with weak hiring momentum and tepid demand, the sector could face further slowdown if economic uncertainty and rising tariff-related costs lead American clients to cut back on spending.

The MK Global report notes that hiring in IT services remains flat. The JobSpeak Index fell 2.5% year-on-year and 8% month-on-month in March 2025.

The BPO/ITES sector also saw a 7.5% year-on-year decline, indicating stagnation in the recovery of the IT job market.

With companies focusing on improving workforce utilization rather than expanding headcount, hiring is expected to remain “need-based.”

Due to the tariff uncertainty and fears of a potential recession, many IT firms are exercising caution when it comes to discretionary spending and new hires.

Major companies like TCS, Infosys, and Wipro are prioritizing freshers as part of their cost-optimization strategies,

planning to hire 40,000, 20,000, and 10,000–12,000 fresh graduates respectively in FY26.

Could this lead to the largest IT layoffs in India?

Industry leaders are expressing concern about potential job losses. IT entrepreneur Rakesh Nayak painted a grim picture on social media:

“If Trump imposes even a 20% tariff on software imports from India, we’ll have no choice but to lay off all our employees in India. It would be our first round of layoffs in 16 years.”

Another voice in the industry echoed this sentiment, predicting a historic downturn. A user commented online,

“People were laid off after the dot-com bust and the subprime crisis, but this could be the biggest crisis we’ve ever seen.”

Domino effect on the Indian economy?

The potential layoffs could extend far beyond the IT sector.

India is a major recipient of foreign capital and remittances, and job losses in tech could weaken consumer spending and economic growth.

Some experts warn that this may mirror past financial crises—but on a larger scale.

As uncertainty mounts, Indian IT firms and policymakers must carefully strategize their next moves.

The big question now looms: How will the industry weather this unpredictable storm?

President Trump’s announcement of new tariffs has sent shockwaves through India’s export-driven industries, especially IT services.

The newly proposed 26% tariff on Indian imports could make Indian tech services significantly more expensive for U.S. clients.

India’s software and services exports to the U.S. account for over 60% of the sector’s total revenue, making the impact potentially severe.

Major IT firms are already bracing for a downturn, cutting discretionary spending and freezing non-essential hiring.

Nasscom, the trade association for the tech industry, has warned that these tariffs could reduce India’s IT export growth by 3-5%.
In 2024, the Indian IT sector generated $254 billion in revenue, with over $180 billion coming from exports.

If client spending declines, small and mid-sized IT companies could be the first to feel the heat.

Job postings in IT have already declined by 12% in Q1 2025 compared to the previous quarter.

Attrition rates have dropped as employees choose job security over switching roles amid rising uncertainty.

Companies like Infosys and Wipro are optimizing operations by automating routine tasks and reducing reliance on contractors.

Freelancers and gig-based tech workers are also witnessing fewer international project opportunities.

Startups in the tech space, which depend on U.S.-based clients, are facing funding crunches and longer sales cycles.

Many companies are shifting focus to non-U.S. markets such as Europe, the Middle East, and Asia-Pacific.

Export diversification is being considered a top priority to reduce dependency on the American market.

Analysts suggest a possible delay in campus recruitment drives as companies reassess their workforce needs.

In the long term, tariffs could push Indian IT firms to set up more delivery centers in the U.S. to bypass import costs.

Several Indian tech companies are lobbying the Indian government for diplomatic intervention with the U.S.

The rupee has also come under pressure due to fears of declining export revenues.
Indian policymakers are expected to announce a support package to cushion the IT sector.

Experts believe adaptability, automation, and global expansion will be key for Indian IT to withstand this storm.