IT firms are struggling to retain AI talent. TCS mulls opening doors to gig workers

India’s largest information technology (IT) services company will consider allowing data architects and data scientists to log in for a few hours with the option to work elsewhere, according to a senior executive at the company, who didn’t want to be identified as the information is not yet public.

“For instance, data architects do not need to work for 8 hours; their work often gets done in four hours, and then why should they not be allowed to work somewhere else? We will look at these sorts of gig options for skilled employees, and that will be the future of the workplace," the executive said.

The contours of this plan are still being finalised, and the company will have to factor in data privacy and client confidentiality concerns, the executive said.

India’s software services providers mostly hire full-time employees. TCS’s plan marks a shift for the IT sector, as companies struggle to retain AI-related specialists. And it comes when the company faces margin pressure, and the offshoring giant has lined up massive investments in data centres.

TCS, which ended last year with 24.3% operating margins, said it would invest $6.5 billion over six years in building data centres in excess of 1 gigawatt. The decision is expected to erode profitability as it entails investments in machinery, power, and land, Mint reported on 10 October.

TCS ended fiscal 2024-25 with $30.18 billion in revenue, up 3.8% on a yearly basis, and stares at a revenue decline in the ongoing financial year 2025-26. It lost key clients to competitors, and the completion of the 4G network deployment contract with state-run Bharat Sanchar Nigam Ltd has slowed down revenue collection.

The Mumbai-based IT outsourcer laid off 2%, or 12,200 employees, across middle and senior ranks in July this year as it prepares to hire staff with relevant skills for the AI transition. Gig-based hiring will further help save on the cost of employment-related benefits, gratuity, and the prospect of paying salaries to staff not actively engaged in projects.

Phil Fersht, chief executive of HFS Research, a Massachusetts-based IT consulting firm, however, said that TCS’s plan “is not a wholesale change to employment models".

“It is a targeted experiment aimed at retaining scarce talent while adapting to AI-driven productivity shifts. If it works, it will influence how other firms think about utilization, compensation, and workforce design. If it fails, it will likely fail due to governance and client trust issues, rather than talent demand," said Fersht. “This is less about moonlighting and more about rethinking how productivity, time, and outcomes are aligned in an AI era."

To be sure, India’s IT firms, including TCS, had called the practice of moonlighting by employees during the pandemic-era recruitment frenzy an “ethical" issue. Flexible hiring, however, will be driven by the need for efficiency, experts said.

“Larger IT firms have plenty of legacy workforce, and they are re-imagining better talent utilisation with this move," said Kshitij Saraf, equities associate at Tusk Investments. “If they are getting a better return on investment, they will do it. At this point, such flexi deployments are likely to be limited to large caps and not in any customer-facing work because of privacy concerns."

Both Saraf and Fersht said the model will be useful for architects, domain experts, certain AI specialists or advisory roles, and far less applicable to delivery-heavy, junior or team-dependent positions.

According to Saraf, it would only be limited to the largest homegrown IT services companies.

“Mid-tier IT services companies and engineering research firms, which would probably work more closely with clients and focus on product designing, like that of a pilot cockpit, for instance, might not do something like this because such a move exposes their inner workings to competitors," he said.

And even if mid-cap IT firms adopt flexible hiring, he said that would be limited to back-end teams, which handle routine tasks.