IT layoffs cloud recovery hopes as consumption firms brace for slowdown

India's consumption-driven recovery may face fresh headwinds as rising job cuts in the information technology (IT) sector trigger concerns over discretionary spending, reported TOI.

With Tata Consultancy Services (TCS) recently confirming over 12,000 layoffs and industry body Nasscom indicating more job losses ahead, consumer-facing companies are preparing for a possible slowdown in demand, particularly for apparel, fashion, electronics, and other non-essentials.

The tech sector, a key employer of young professionals, plays a significant role in driving household expenditure. A downturn in this segment could have a spillover effect on wider consumption trends, experts said.


While some sectors such as packaged goods and jewellery may be more resilient, others are already signalling caution. “Sustained consumption growth will depend on economic stability and job security,” Joy Alukkas, CMD at Joyalukkas Group, told The Times of India. However, he added that the jewellery segment may see limited impact due to the cultural and investment value Indians associate with gold.

Nitin Bhatt, technology sector leader at EY India, noted that IT hiring remains weak. “Even at a slower rate, the industry added around 1.2 lakh jobs in FY25, but the outlook for FY26 is subdued,” he said.

Uneven recovery and cautious sentiment
Though lower inflation, interest rate reductions, and recent tax reforms have created a base for consumption revival, company results suggest the recovery is still in early stages. Colgate-Palmolive, for instance, flagged “tough” operating conditions in its Q1 FY26 earnings call, underlining the pressure on rural and urban demand alike, as per the TOI report.

In the fashion and lifestyle segment, consumer caution is evident. Akhil Jain, CEO and MD of Madame, said that while easing inflation and tax breaks offered some support, full-price retail demand remains irregular. “Job uncertainty in sectors like IT does impact consumption, particularly in categories like fashion,” Jain said.

Personal care players are also monitoring sentiment closely. Sunil Agarwal, chairman of RSH Global, which owns Joy Personal Care, observed early signs of cautious spending. “The IT layoff trend has created some unease in consumer sentiment,” he said. Agarwal added that the upcoming festive season will be the real test of how demand shapes up in the wake of employment-related anxieties.

With employment concerns mounting in a sector that fuels significant urban spending, companies across discretionary categories remain watchful as they head into the crucial second half of the fiscal year.

(With inputs from TOI)