Indian IT Firms Face AI-Driven Layoffs as Freshworks and Coinbase Cut 10 Percent of Workforce

What HappenedThe technology industry is undergoing a seismic shift as AI-driven automation replaces human roles at an accelerating pace. Freshworks and Coinbase announced this week that they are cutti

What Happened

The technology industry is undergoing a seismic shift as AI-driven automation replaces human roles at an accelerating pace. Freshworks and Coinbase announced this week that they are cutting more than 1 in 10 jobs, joining a growing list of companies replacing portions of their workforce with AI technologies. Tech company layoffs have now neared 100,000 in 2026 alone, according to industry tracking data. The trend has hit Indian IT firms particularly hard, as many global companies re-evaluate their outsourcing and staffing needs in the age of generative AI.

The Numbers Behind the Trend

According to layoff tracking data, nearly 100,000 tech workers have been laid off globally in 2026, with AI-driven automation cited as a primary factor in over 40% of cases. Freshworks, the Chennai and San Mateo-based SaaS company, announced it would cut approximately 12% of its workforce, citing operational efficiencies gained through AI tools. Coinbase similarly reduced its headcount by 11%, with CEO Brian Armstrong stating that many tasks previously performed by human staff can now be handled by AI agents.

The impact on Indian IT services companies is particularly concerning. TCS, Infosys, Wipro, and HCLTech — which together employ over 1.5 million people — are facing pressure from clients to deliver more with fewer resources. While these companies are not announcing mass layoffs yet, hiring has slowed significantly, and attrition rates have risen as employees worry about AI displacement.

AI ROI Reckoning

Interestingly, the layoffs come amid what analysts are calling the "AI ROI reckoning." While companies are spending billions on AI infrastructure, many are struggling to demonstrate concrete returns. Uber reportedly blew through its annual AI budget in months without achieving its deployment targets. Venture capital firm NEA noted that "getting the ROI math right" has become the defining challenge of enterprise AI adoption. This tension — between the pressure to adopt AI and the difficulty of measuring its returns — is reshaping corporate strategy across the technology sector.

Company	% Workforce Cut	Primary Reason	Indian Ops Impact
Freshworks	~12%	AI operational efficiencies	Chennai office affected
Coinbase	~11%	AI agent automation	India engineering center
Industry Total	~100K in 2026	40%+ AI-driven	IT hiring slowed 35%

India Angle

For India, the AI-driven layoff trend represents both a threat and an opportunity. India's IT services sector contributes approximately $250 billion annually and employs 5 million people directly. An extended slowdown in traditional IT services could impact economic growth and employment, particularly in Tier-2 cities where IT firms are major employers. However, Indian tech workers are also well-positioned for the AI transition. Companies like TCS, Infosys, and Wipro have invested heavily in AI upskilling programs, with over 500,000 employees trained in AI tools and platforms. The Indian government's IndiaAI Mission, the PLI scheme for electronics, and the growing startup ecosystem are creating new AI-native jobs that could offset losses in traditional roles.