Why India's IT slowdown could trigger an economy-wide crisis

Over the last few days, my Twitter has been abuzz with Oracle cutting 18% of its global workforce. Around 12,000 of those jobs were in India. Thousands of engineers woke up one morning and found themselves without work. And Oracle is not alone. This is a pattern now.

I believe we are staring at perhaps our most challenging economic moment since 1991. Possibly harder than the global financial crisis. Possibly harder than COVID. And I say this without even factoring in geopolitical risks. Here is why.

India built its modern economic story on the back of IT services. Over $200 billion in annual exports. Lakhs of engineers hired, trained and groomed every single year. These were not just jobs. They were finishing schools. Fresh graduates walked in and came out with professional skills, technology depth and the confidence that comes from a stable paycheque.

That confidence made them spend. They bought homes, cars, insurance. They became the backbone of India's consuming middle class. And they paid their taxes honestly.

Now, picture what happens when that engine slows down. First, placements outside the top 15 colleges have collapsed. Rates at many institutions have dropped to 20 to 30%. A generation of graduates is entering a market that does not want them. The informal economy cannot replace what an Infosys or TCS campus would have offered: structured learning, mentorship, global exposure.

Second, if IT export revenues decline, India's trade balance takes a direct hit. Our currency is extremely sensitive to the trade deficit. A weaker rupee forces the RBI into a corner, and the response often ends up being inflationary.

Third, when well-paid professionals lose jobs or stop getting hired, consumer demand falls. We are already seeing it. Several listed consumer companies have seen volume growth slow to single digits. If India is truly growing at 6%, it is not showing up in household spending.

Rising unemployment among the educated. Pressure on the currency. A slowdown in consumer demand. That is a triple whammy. The deeper worry is that AI will accelerate all of this. These jobs are not coming back in the same form. And I am not confident that policymakers are thinking about this with the urgency it demands.

India needs a serious, forward-looking plan. Not six months from now, today.