No, You Didn’t Get Laid Off Because of AI — You Were Already Destined to Be!
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Almost every few weeks, we come across headlines about a major IT company laying off thousands of employees. Oracle reportedly announced layoffs affecting around 21,000 employees. TCS announced 12,000. Accenture laid off around 11,000, and Cognizant reduced its workforce by several thousand as well.
The question is: Is the IT industry going through a recession? Is artificial intelligence replacing people? Or is something else happening behind the scenes?
To answer these questions, let’s start by exploring how large service-based IT companies actually work.
The Reputation is Everything
Companies like Accenture, Capgemini, Cognizant, Infosys, TCS, and Wipro build and maintain highly complex software systems for some of the world’s largest businesses. Their reputation is everything for them. Clients trust them because they can deliver projects reliably and on time.
To maintain that reputation, these companies generally follow two important practices.
(1) Keep More Employees Than Needed
Large IT services companies usually maintain a workforce that is slightly larger than their current project requirements.
Why?
Because project demand can suddenly increase. A client may award a large contract with very little notice, leaving the company with no time to hire the required employees. There may be unexpected resignations, emergencies, or disruptions within teams. Having additional skilled employees available allows the company to respond immediately without delaying deliveries.
Clients expect these companies to always have resources ready.
(2) Strong Job Security
These companies are also known for providing stable employment. Employees are not usually dismissed the moment a project ends.
This helps them attract experienced professionals. After all, talented engineers prefer working for organizations that offer stability rather than companies that may terminate employment at any moment.
Stable employees also build confidence among clients, who know that project teams are less likely to disappear midway through development.
Then Why Do Layoffs Happen?
At first glance, does this seems contradictory? If these companies deliberately hire extra people and provide good job security, why do they occasionally lay off thousands of employees? The answer lies in a concept called benching.
Benching
Since these companies maintain extra employees, there are always some people who are temporarily not assigned to any active client project. These employees are said to be on the bench.
While on the bench, employees continue to receive their salary, report to work, complete internal training, improve their skills, and remain available for future projects.
The name comes from the simple idea of waiting — just as someone waits on a bench at a bus stop until the bus arrives, employees wait until a suitable project becomes available.
In most cases, an employee remains on the bench for only two or three months before being assigned to a new project. Another employee whose project has ended may then take their place on the bench.
This cycle continues, and for healthy IT companies, benching is completely normal.
The Scale
It is also important to understand the size of these organizations. These are not companies employing a few hundred people. They employ hundreds of thousands.
Approximate workforce sizes are:
| Company | Employees# |
|---|---|
| Oracle | 160,000 |
| Microsoft | 230,000 |
| Wipro | 235,000 |
| Cognizant | 337,000 |
| Infosys | 337,000 |
| Capgemini | 420,000 |
| TCS | 600,000 |
| Accenture | 790,000 |
When organizations operate at this scale, even a seemingly huge layoff often represents only a very small percentage of the total workforce. We’ll see that with an example below, but before that, let’s see who usually gets laid off.
Who’s Really on the Chopping Block?
Now comes the big question: could you be next? Well, employees who remain on the bench for six months or longer are often the first to be shown the exit door, as the company has been unable to find projects matching their skills.
Although this does not necessarily mean they are poor engineers. Sometimes their technology stack has become less relevant, client demand has shifted, or their skills no longer match current business requirements.
When management decides to cut costs, long-term bench employees are usually the first to get wicketed. To understand why companies target these employees, let’s do some math.
Let’s do some math
Consider a simplified example. Suppose Accenture targets to earn ₹10,000 crore in profit during the financial year.
After reviewing the first few months of the financial year, management estimates that profit may only reach around ₹8,500 crore. They now need to improve profitability.
One option is to reduce operational costs. Suppose they identify employees who have remained on the bench for over six months. These employees receive three months’ notice, after which they leave the company.
Now Accenture employs nearly 790,000 people. Even if it reduces only about 1.5% of its workforce, that still amounts to roughly 12,000 employees.
Just think about it: if your company has 65 or 70 employees and you fire just one (1.5% of 67), that’s roughly equivalent to what Accenture is doing in this example.
Here’s where it gets interesting. These 12,000 employees were given a three-month notice period. By the time they left the company, suppose three months of the financial year had already passed.
Assuming an average monthly salary of ₹1 lakh per employee, the company would save approximately six months’ worth of salaries for the rest of the year.
That’s ₹6 lakh per employee for the remaining six months (after the notice period) of the financial year. Multiply that by the 12,000 employees who were laid off, and it amounts to nearly ₹720 crore — covering almost half of the ₹1,500 crore shortfall the company was trying to bridge.
The remaining amount could be recovered through other cost-cutting measures. But laying off just a small fraction of its workforce helped the company recover almost half of its profit shortfall.
The Dramatic Headlines
So, when news reports say that a company has laid off 12,000 employees, the number sounds enormous. However, without considering the total workforce, the headline can be misleading.
Twelve thousand employees appear huge in isolation. As a percentage of nearly 800,000 employees, however, it represents only a small fraction of the company.
The Scapegoat
And this is not something new. The reality is that large IT companies have been optimizing their workforce long before ChatGPT existed. Whenever profitability falls short of expectations, companies look for ways to reduce costs. Employees who have remained on the bench for an unusually long period often become the easiest targets.
The only thing that has changed is the excuse.
A few years ago, companies blamed global recession. Today, AI has become the perfect scapegoat because it dominates the headlines. Blaming AI sounds far more convincing than admitting that layoffs are simply part of routine cost optimization to improve profitability.
Ironically, these are also the companies best equipped to survive technological disruption. (Remember COVID-19? When all other industries collapsed, only IT industry flourished at that time). Their size, financial reserves, and diversified client base make them far more resilient than smaller businesses. When recessions or new technologies like AI disrupt the industry, startups and small IT firms feel the impact first — not the giants.
So the next time you read that a major IT company has laid off thousands of employees, don’t immediately conclude that AI stole those jobs. In many cases, AI is simply taking the blame for a decision that was primarily driven by business economics.