Abeed (name changed), an M.Tech student from IISc, is one month away from finishing his course. After doing his B.Tech in mechanical engineering, Abeed decided to pursue a master’s in an AI-related course at the prestigious institute.Between 2022 – when he finished his undergrad from an engineering college – and now, things have changed vastly. “Fresher hiring was very good in 2022,” he remembers. However, lately, placements have been sluggish, he says, with whatever existing demand largely concentrated in AI-related roles.“Big names like Google or Microsoft are either not coming or are hiring in single digit numbers,” says Abeed, who has been offered a job by a startup. “A lot of the recruiters are now startups,” he says.The demand for the Indian tech talent, predominantly concentrated in Bengaluru, seems to be on a downward slope. Once a lucrative sector for aspirational young Indians seeking upward social and economic mobility, the ITeS sector now seems to be hitting the pause button. According to experts, the shift is structural not cyclical. A nosediveAccording to data from specialist staffing firm Xpheno, the tech sector’s current contribution to total active talent demand is 47%. This is the second time it has fallen below 50% since December 2025. The starkness of this becomes more pronounced when compared against the peak demand the sector saw in as recent as January-February 2022, when it commanded around 87% of all active talent demand in India.And then began the free fall. By mid-2023, the demand took a nosedive. Across the world, tech majors started announcing layoffs. In India, IT and ITeS companies began retreating from engineering college campuses where mass hiring across disciplines was once commonplace. A lull in hiring set in, drawing a flat headcount growth from most ITeS companies.Subdued demandThe Indian IT job market has been largely driven by IT services companies, which employ around 25 lakh people. While the West Asia crisis played a role in the demand drop, the headwinds started well ahead of it. A combination of global economic uncertainty, high interest rates, weaker client spending in key overseas markets, and the correction that followed aggressive post-pandemic hiring contributed to this. The anticipation of AI has been another factor contributing to the sluggish talent demand.According to Xpheno’s Active Tech Jobs Outlook – India report for May 2026, the Indian tech sector’s active talent demand outlook for the month of May has dropped by 2% compared to the previous month. The report further adds that there are no visible significant changes in the context of the larger tech market that can potentially drive a positive recovery trend in the near term.The changing workforceD.D. Mishra, analyst at Garnter, notes that the dream run of IT services companies was long over.“The industry is moving towards autonomous modes of operation. For a very long time, the kind of profitability and the double-digit growth that the ITeS companies have enjoyed have slowed down,” he says. Top Indian ITeS companies such as TCS, Infosys, HCLTech, Wipro and Tech Mahindra have reported single digit or negative growth in revenue since FY 2025.“Labour-based delivery is no longer a very popular mode of doing things. The concept of a low-cost destination may also change over a period of time unless we flip it and make these destinations much more suitable for AI ops, implementing the AI capabilities and driving the AI capabilities along with the clients,” notes Mishra, adding that this disruption, which is long-term, will change the labour market.He also foresees a change in the organisation structures. The pyramid-shaped staffing structure will give way to a diamond-shaped structure, with a stronger concentration of specialised talent in the middle and relatively fewer roles at the top and bottom. This is reflected in the Xpheno report too. According to the report, mid-senior openings account for 48% of all active openings in May 2026, accounting for 52,000 openings. “Opportunities for entry-level tech talent up to two years of experience have dropped to 13K active volume compared to 15K in April 2026. On a YoY basis, entry-level openings show a 19% drop.” Sanketh Chengappa, director and business head of professional staffing at Adecco India, affirms that he has been seeing this changing demand from his clients.“Most of our clients come up with requests for people with minimum two years' experience.”According to him the demand for roles such as AI/ML engineers, generative AI specialists, data scientists, AI architects, ML ops engineers, LLM specialists, cloud and platform engineers, DevOps platform engineers, cloud security engineers and specialists in cyber security and risk have been rising. However, the talent is in short supply.No more mass hiringThe tightening of entry-level hiring is echoing in campus placements, where companies once recruited engineering graduates in droves.Phani Kumar Pullela, Director, placements, RV University, Bengaluru, recollects a question recently posed by an industry person to him.“They asked me if we have a fresher with two years of experience.” As ludicrous as it may sound, it becomes clearer as he explains. “What they are referring to is whether the student is undergoing a summer immersion or summer internship, if they are doing capstone projects, whether they are done in partnership with the industry and if the student is coming up with three to four internships by the time they complete the third year. Such students are immediately getting jobs.”In other words, if earlier candidates were provided rigorous training at the companies that recruited them, today they are expected to be ready for the role from day one. This has brought down the volume of the hires, too.“We get 500 to 700 companies, but they don’t want to hire in large numbers now. Many of them hire in single digits, but look for high-quality candidates and pay them relatively high. We are seeing a maximum of five students being selected per company for packages above ₹10 lakh per annum,” Pullela says. AI interviewersMany companies now also seem to be using AI interviewers for the first round of technical interviews. This has not been easy for the students.