Retailers, restaurants in tech hubs fear festive slump amid TCS, IT layoffs

Bengaluru: Tata Consultancy Services’ announcement of a mass layoff and the fear of more IT companies following the market leader with job cuts have left pubs, restaurants and retailers feeling unnerved ahead of the crucial festive season.

They expect these developments to hurt consumer sentiment, especially in Bengaluru, Hyderabad, Pune and the National Capital Region where most IT professionals work and live. Some industry executives said there have already been signs of down trading in consumption by IT sector employees for the past few weeks, due to delayed salary hikes, poor business outlook in the sector and global job cut announcement by large tech companies.

An executive at a leading alcobev retailer in Bengaluru said there has already been a 40% drop in large purchases compared with normal weekends in areas like Whitefield, which houses many IT companies including a large TCS facility.


Consumers are cutting down on visits to bars as well as reducing liquor consumption at home, he said, requesting not to be named. "However, in places like Indiranagar, which has a mix of non-IT professionals as well, there is no down trading," he said.

Consumer mood is impacted where IT sector employees work or live, such as areas like Whitefield in East Bengaluru and HSR Layout in the south, said Chandu Reddy, director of Bengaluru-based cell-phone retail chain Sangeetha Mobiles.

TCS on Sunday announced plans to lay off nearly 2% of its workforce, or more than 12,000 people, mostly in mid to senior grades, raising fear among employees across the IT sector who were already concerned about the impact of artificial intelligence on their jobs. TCS has also paused lateral hiring and salary hikes globally, ET reported Tuesday citing people in the know. Rival Wipro said earlier this month that it has yet to make a decision on employee salary hikes, and that any revision would depend on the demand environment.

The industry fears most other IT companies to follow suit.

Globally too, big tech companies have announced layoffs in the past 2-3 months. Microsoft is cutting 9,000 jobs, while Intel is laying off more than 5,000 in the US and Google is laying off hundreds of employees.

Layoffs do affect sentiments if it becomes widespread, said Nilesh Gupta, director at electronics retail chain Vijay Sales. “The IT sector layoffs are sentimentally negative. Consumers tend to reduce spending.”

Harsha Vadlamudi, cofounder of LocaLoka Tequila and managing partner of Ironhill India, a chain of bars in Hyderabad and Bengaluru, said generally during such economic crises, there is a 10-15% reduction in the amount consumers spend and a reduction in the number of days they visit restaurants.

Real estate

IT sector employees are usually one of the top spenders as most of them are young with high disposable income, said executives at the real estate industry. While the real estate industry is cautious, they are optimistic that the impact will be short-lived and professionals from other sectors will fill the gap in the interim.

With 70% of demand now coming from non-IT sectors, residential absorption is expected to remain resilient with only minimal sentiment-led wait and watch or fluctuations, if any, said Sanjay Dutt, managing director and CEO, Tata Realty and Infrastructure. “This is a good break for the real estate sector to take a stock of sentiments and market so that they don’t repeat the past and end up building inventories,” he added.

Mallanna Sasalu, CEO at real estate developer Puravankara South, said while the IT sector is recalibrating, it’s also evolving, and that evolution continues to support high-quality job creation across tech, AI, fintech and GCCs.

“The homebuyer profile has matured, and we see sustained traction in strategic micro-markets,” he said. “In fact, times like these often create opportunities—for investors, buyers, and developers alike—to focus on fundamentals and unlock real value.”

As per researcher JLL, transactions in residential properties rose 7% on year to 69,530 in the April-June quarter, though demand in the first six months declined for the first time since the pandemic.