daily editorial analysis for 4 November 2025

India’s IT Dream is at a Crossroads

Context

• For nearly three decades, India’s Information Technology (IT) industry has stood as a cornerstone of national economic progress and a symbol of middle-class aspiration.
• Though it employs only around 1% of the national workforce, the sector contributes nearly 7% to India’s GDP and has propelled millions into stable, global careers.
• Companies like Infosys, Wipro, and Tata Consultancy Services (TCS) once represented assured success for young engineers across the country.
• However, recent large-scale layoffs, including TCS’s unprecedented reduction of nearly 20,000 roles in a single quarter, have raised pressing questions about the future of the industry.

Changing Landscape of the Global IT Industry and End of the Traditional Outsourcing Model

• Changing Landscape of the Global IT Industry

  • The forces transforming India’s IT sector are global.
  • Major technology companies in the United States and Europe, such as Amazon and Meta, are also restructuring and reducing headcount due to advances in automation and uncertainty in global markets.
  • The widespread deployment of Artificial Intelligence (AI), particularly generative and agentic AI systems, has automated routine functions such as coding, coordination, and reporting, functions that once formed the foundation of India’s IT services model.
  • Simultaneously, stricter U.S. immigration policies and rising visa costs have made it costly for Indian firms to send mid-level staff abroad, pushing companies to localize talent in major international markets.
  • These shifts challenge the traditional outsourcing model that relied heavily on cost-effective, large-scale talent supply from India.

• End of the Traditional Outsourcing Model

  • India’s IT success story was built on the assembly line approach: hiring large numbers of engineers, training them in basic coding skills, and deploying them in global projects.
  • This model offered efficiency and scale, enabling the country to become the world’s back-office powerhouse.
  • However, clients today are seeking more than manpower, they want sophisticated solutions, faster delivery, and specialized expertise in cloud computing, cybersecurity, and AI-based platforms.
  • As a result, many mid-career professionals, especially those with legacy skills or managerial roles lacking technical depth, find themselves vulnerable. The market now rewards agility, innovation, and deep technological capability rather than scale alone.

Skill Gaps and Workforce Challenges

• The transition to AI-driven IT has exposed a broad skill gap within the workforce.
• Technologies like SAP ECC, once considered indispensable, are increasingly supported by automation tools.
• Young graduates entering the industry face competition from both advanced automation and a global talent pool skilled in emerging technologies.
• The days when mastering Java or .NET guaranteed career growth are gone; the future belongs to those proficient in machine learning, data engineering, cybersecurity, and product-oriented problem solving.
• This shift necessitates massive upskilling initiatives and academic reform to bring engineering education in alignment with industry needs.

Policy Imperatives and Industry Responsibilities

• To safeguard India’s technological leadership, a coordinated policy and industry response is essential.
• Companies such as TCS have already upskilled hundreds of thousands of employees in AI-related competencies, signalling industry recognition of the challenge.
• However, upskilling needs to extend system-wide. Government measures should focus on:
• Encouraging AI-based curriculum in engineering and vocational programs
• Incentivising upskilling and continuous learning through subsidies and partnerships
• Supporting startup ecosystems and deep-tech innovation hubs
• Considering mandatory severance mandates for mass layoffs
• Providing social safety nets, including mental-health support and career transition services
• India must also engage globally to protect its digital workforce interests, ensure data security, and preserve access to international markets.

The Road Ahead: Reinvention, Not Retreat

• India’s IT journey is far from over. It remains a global digital leader, contributes over $280 billion to the economy, and anchors the country’s transformation across sectors.
• But the industry’s identity is shifting, from outsourcing engine to innovation-driven technological powerhouse. This shift will be challenging.
• Thousands of experienced employees may need to reinvent their skillsets, and young graduates must adapt to an era where foundational coding skills are insufficient.
• Yet, this moment also presents an opportunity: to build products rather than just provide services, to emphasise creativity and research, and to shape the global rise of AI responsibly and inclusively.

Conclusion

• India’s IT sector is transitioning from quantity-focused employment to quality-driven innovation, from routine service delivery to advanced technology and product development.
• India stands at a pivotal juncture, one where resilience, strategic reform, and continuous learning will determine whether the country retains its global technology leadership.
• With visionary policy support, bold corporate commitment, and a workforce equipped for the age of AI, India’s IT narrative can continue to thrive.
• The bloom may have dimmed, but the roots of the industry remain strong, and with courage and foresight, the next chapter can be even more transformative than the last.

India’s IT Dream is at a Crossroads FAQs

 Q1. Why is India's IT sector undergoing major layoffs?

Ans. India's IT sector is undergoing layoffs because automation, especially AI, is reducing the need for routine IT tasks and clients now demand higher-skilled, specialised tech talent.

Q2. What traditional model of IT work is becoming obsolete?

Ans. The traditional model of hiring large numbers of engineers to perform basic coding tasks for global clients is becoming obsolete.

Q3. Which skills are now essential for IT professionals?

Ans. Skills in AI, data science, cloud computing, and cybersecurity are now essential for IT professionals.

Q4. What role should the government play during this transition?

Ans. The government should reform engineering education, support large-scale upskilling programs, strengthen startup ecosystems, and provide safety nets for displaced workers.

Q5. Is India’s IT sector declining?

Ans. India’s IT sector is not declining; it is evolving from a manpower-driven outsourcing model to an innovation-driven, AI-focused industry.

Source: The Hindu

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The Case for Energy Efficiency

Context

• India has aggressively expanded its clean energy capacity, with non-fossil fuel sources making up about 50% of total installed electricity capacity as of June 2025.
• The grid emission factor has risen from 0.703 tCO₂/MWh in 2020–21 to 0.727 tCO₂/MWh in 2023–24, meaning the power consumed today is dirtier than it was five years ago.
• This paradox, rising renewable capacity accompanied by increasing emissions, highlights the complex realities of India's decarbonization journey.
• Understanding the mismatch between capacity and generation, the timing dynamics of renewable supply and demand, and the critical role of energy efficiency offers a pathway toward resolving this contradiction and achieving a truly clean power system.

The Capacity–Generation Mismatch

• India’s clean energy progress is often assessed by the growth of installed renewable capacity. Yet, capacity does not equate to delivered electricity.
• Renewable sources such as solar and wind typically operate at only 15–25% of capacity due to intermittency, whereas coal and nuclear power plants function at much higher utilisation levels of 65–90%.
• As a result, despite half the installed capacity being non-fossil, renewables supply only about 22% of actual electricity generation.
• The rest continues to come from fossil fuels, predominantly coal. In a rapidly growing economy with rising electricity demand, coal has filled the energy gap, pushing up total emissions.

Temporal Demand–Supply Challenges

• India’s electricity demand profile further complicates decarbonization efforts.
• Solar energy peaks during the afternoon but declines sharply by evening, just as household and commercial electricity demand surges.
• This mismatch forces coal-based power plants to serve as the grid’s primary backup, particularly during peak hours and at night.
• While renewables are growing fast, the system lacks the flexibility needed to rely on them during critical demand periods.
• Round-the-Clock renewable power solutions are emerging and are already cost-competitive with new coal plants, yet scaling them requires extensive land acquisition, transmission infrastructure, and financing areas where progress remains slow.

Energy Efficiency as a Strategic Necessity

• Energy efficiency emerges as a crucial, often overlooked, solution to India's clean energy paradox.
• Known as the first fuel, efficiency reduces electricity demand before it even arises, easing pressure on fossil-based generation.
• Efficient appliances, industrial equipment, cooling systems, and building standards can flatten peak demand curves, enabling better integration of renewable energy resources.
• Evidence from the Bureau of Energy Efficiency shows India saved roughly 200 Million Tonnes of Oil Equivalent and avoided around 1.29 gigatonnes of CO₂ between FY2017-18 and FY2022-23, a testament to the transformative potential of efficiency-driven policies.
• For a nation facing relentless growth in energy demand, efficiency is not optional; it is central to successful decarbonization.

Policy Directions for a Flexible, Low-Carbon Grid

• For India to unlock the full value of its renewable energy capacity, complementary policy measures are essential.
• These include enabling households and businesses to use stored battery power through virtual power plants, enforcing higher efficiency standards for appliances, incentivising small industries to adopt efficient machinery, and introducing dynamic electricity pricing to shift consumption toward periods of high renewable availability.
• Additional steps such as scrapping outdated equipment and allowing distribution companies to procure high-efficiency, clean energy services, such as green cooling, can accelerate transition efforts.
• The Central Electricity Authority projects a decline in India’s grid emission factor to 0.548 by 2026-27 and 0.430 by 2031-32, but achieving this trajectory requires prioritizing system flexibility and energy efficiency alongside renewable expansion.

Conclusion

• The path to resolving this contradiction lies not only in building more renewable energy plants but also in redesigning the energy system to better utilize them.
• Energy efficiency must become the foundation of India’s decarbonization strategy, complemented by flexible grid infrastructure, advanced storage solutions, smart pricing mechanisms, and progressive regulatory reforms.
• By embracing efficiency as the first fuel and prioritizing flexibility over fossil-based backup power, India can ensure that clean energy capacity translates into truly clean electricity, securing a sustainable, low-carbon future.

The Case for Energy Efficiency FAQs

Q1. Why has India's grid become more carbon-intensive despite renewable growth?

Ans. India’s grid has become more carbon-intensive because renewable capacity has grown faster than actual renewable electricity generation, leading to continued reliance on coal to meet rising demand.

Q2. What is the key difference between capacity and generation?

Ans. Capacity refers to the maximum potential power a plant can produce, while generation refers to the actual electricity produced and supplied to the grid.

Q3. Why do coal plants remain essential in India’s power system?

Ans. Coal plants remain essential because they provide electricity during peak evening hours when solar power is not available.

Q4. How does energy efficiency support renewable energy integration?

Ans. Energy efficiency supports renewable integration by reducing demand peaks, making it easier for the grid to rely on renewable energy rather than coal.

Q5. What policy measures can help India reduce grid emissions?

Ans. India can reduce grid emissions by expanding battery-based virtual power plants, enforcing stricter appliance standards, adopting flexible electricity pricing, and promoting efficient technologies.

Source: The Hindu