Will 2025 Be The Year Of Layoffs? What Are The Top Job Picks And Will Your Pay Package Be Heavier?

We’ve just stepped into 2025, and the year has already presented itself as a mixed bag for the workforce. On the one hand, layoffs loom large across industries, while on the other, there’s cautious optimism about roles that may gain traction. As for salaries? Well, let’s just say the shine seems to be fading.

Starting with Salaries…

The global uncertainty that plagued much of 2024 has unfortunately spilled over into 2025. As a result, most multinational corporations (MNCs) are rolling out flat to slightly lower salary increments for employees on the January-to-December performance cycle.

The average pay hike across MNCs in India is projected to be 8.8% in 2025, a marginal dip from the 9% actuals recorded last year. Surveys covering about 100 companies indicate a decline in salary projections for the FY25 cycle, ranging between 0.1-1.1 percentage points, depending on the industry.

Businesses across sectors are struggling with challenges, leading to these conservative salary trends. However, there’s a silver lining: Global Capability Centres (GCCs). GCCs, which have become a vital cog in India’s corporate ecosystem, are leading the pack with projected increments of 9.1%.

While this figure is slightly lower than last year’s 9.2%, it’s still a bright spot in an otherwise subdued salary landscape. GCCs benefit from the current sluggish job market, enabling them to maintain controlled wage bills without risking talent attrition.

Tech Industry Under Pressure

The tech sector, often seen as green for pay hikes, isn’t immune to these trends. IT product companies, historically among the top paymasters, are offering 9% increments this year—a full percentage point drop from 2024. Layoffs, hiring freezes, and the advent of disruptive technologies are keeping this industry on its toes.

Meanwhile, IT services companies are also feeling the pinch. With pay hikes declining by 0.2-0.3 percentage points, employees in this space can expect increments between 8.5% and 8.7%.

Financial and Other Services. Steady but Unspectacular

In the financial and services sector, salary increments are projected at 8-8.2%, almost unchanged from FY24. This segment remains one of the smallest contributors to overall salary growth but continues to hold steady in its conservative projections.

Manufacturing and Engineering. A Decline in Momentum

Manufacturing and engineering industries are expected to see pay increases dip by about one percentage point this year. This trend is mirrored across peer industries like automotive, energy, and construction materials, where projected increments range from 8.8% to 9.2%.

The Consumer Industry and Pay Hikes. 

The consumer industry, which has seen a slowdown for the past few quarters, is projecting pay hikes in the range of 8.3-8.5%. “Consumer-facing businesses are struggling; most B2C companies will be more cautious,” said Ghose.

On the other hand, Indian companies, which typically make salary adjustments between April and June/July, have some breathing room before deciding on the quantum of hikes for this year.

What About Layoffs?

Layoffs continue to cast a shadow over the job market. Microsoft has already announced plans for another round of layoffs in 2025. This time, the Satya Nadella-led tech giant is expected to target underperforming employees across various departments, including its security division. As of June last year, Microsoft had over 2,28,000 full-time employees. However, despite these layoffs, the overall headcount may not see a significant reduction.

A Microsoft spokesperson noted that roles vacated due to performance issues are often backfilled. Reports indicate that Microsoft managers have spent recent months evaluating employees across various levels, including some of the highest positions.

The Indian edtech sector, which endured a turbulent 2024 marked by leadership exits, mass layoffs, and restructuring efforts, is also facing challenges. According to Venture Intelligence, edtech funding in 2024 was $608 million, a big contrast to the $4.1 billion raised in 2021. As 2025 begins, experts suggest the sector has an opportunity to rebuild by focusing on personalization, impact-driven solutions, and better governance.

Pockets of Optimism Amid Uncertainty

In the IT sector, the outlook remains mixed. Experts are still uncertain about the continuity of tech spending. However, Q2 (July to September) earnings from 2024 defied the doubts of naysayers. IT companies delivered earnings slightly ahead of brokerage estimates, although management guidance remained cautious.

An analysis of 30 technology companies revealed diverse outcomes: 13 delivered double-digit earnings growth, two posted triple-digit growth, six reported single-digit net profit growth, and nine laggards experienced a decline. While brokerages see signs of pessimism bottoming out, they remain cautious about the road ahead.

Four key takeaways from Q2 earnings signal a potential revival of tech spending:

• Improvement in the BFSI (Banking, Financial Services, and Insurance) sector in North America.
• A resurgence in hiring activities.
• Upward revisions in revenue guidance.
• Growing demand for artificial intelligence (AI) deals.

IT Sector. Fresher Hiring 

Marking a reversal in the declining headcount trend for the software services industry, five of India’s top six IT companies—Tata Consultancy Services (TCS), Infosys, Wipro, Tech Mahindra, and LTIMindtree—added over 17,500 employees in total during the September 2024 quarter, according to a report.

This recovery is further supported by a surge in fresher hiring, with the top four IT majors committing to recruit around 82,000 fresh graduates. A projection suggests that the sector could surpass 150,000 fresher hires in FY25.

The IT sector, now on a path to recovery, is expected to see a 15-20% growth in job opportunities across various industries in 2025, according to talent solutions company NLB Services. Having regained momentum in the latter half of 2024, the industry is gearing up for a promising year ahead on multiple fronts.

Again, Fresher hiring is poised for significant growth, with a 15-20% increase in job opportunities anticipated across various industries. Additionally, demand for highly specialised tech roles—such as artificial intelligence (AI), machine learning (ML), data analytics, and cloud technologies—is expected to surge by 30-35%, driven by the increasing reliance on emerging technologies, NLB Services reported.

U.S. Outlook and Its Impact on India

While the Indian IT sector is on the upswing, the U.S. economy’s recovery from the pandemic presents a mixed picture. Job security remains a concern across industries such as technology, aviation, and retail, which have seen significant layoffs. Companies like Amazon, Boeing, and Spirit Airlines have announced workforce reductions that will extend into 2025.

In November 2024, job cuts in the U.S. reached 57,727, a 3.8% increase from October. The technology sector led the pack, with 429,608 people affected throughout 2024, according to layoff tracker True Up. “Tech and consumer-focused sectors often feel the brunt of market volatility first. When budgets shrink, businesses curb spending on new tools and marketing. Companies with direct exposure to tight capital markets are more likely to see employees facing the chop,” noted an industry expert.

The Role of Artificial Intelligence

Artificial intelligence continues to reshape the labor market in transformative ways. Research conducted by Resume Templates in August 2024 revealed that three in ten companies replaced workers with AI last year. This trend is expected to grow in 2025, with 38% of firms using AI likely to automate roles.

Jobs involving routine, repetitive tasks are at the highest risk. Back-office, middle-office, and customer service roles are particularly vulnerable, although AI is more likely to transform than entirely eliminate these jobs. An expert noted, “AI is likely to make dramatic improvements in workers’ quality of life, even if it eliminates some positions.”

In 2024, major technology companies such as Google and Meta began workforce realignments to prioritise AI initiatives. This trend is expected to continue into 2025, reflecting broader shifts within the industry.

At the same time, roles in green energy and sustainability are emerging as significant growth areas. The World Economic Forum’s Future of Jobs Report illustrates the rise of positions like Renewable Energy Engineers, Environmental Specialists, and Autonomous Vehicle Technicians. Meanwhile, clerical roles such as cashiers, bank tellers, and postal workers are anticipated to see the steepest declines.

The incoming Trump administration may have a significant impact on the job market in 2025. Stephanie Alston, CEO of BGG Enterprises, remarked: “A potential shift in administration following the 2024 elections could also influence the labour market. Policies on taxation, regulation, and business incentives will play a key role in shaping corporate strategies.”

A new administration can trigger changes in fiscal policy, regulation, and trade. If the incoming government boosts business confidence, firms might hold onto staff longer. On the other hand, policy uncertainty or sudden shifts in regulation can lead businesses to slash costs.

The backdrop of these layoffs lies in the economic adjustments post-pandemic. Job cuts rose sharply in 2023, with a 98% increase from 2022, before tapering off slightly in 2024. Despite this, automation and AI adoption have continued to accelerate workforce changes across sectors.

In banking, Bloomberg Intelligence predicts that global banks may cut as many as 200,000 jobs over the next three to five years due to AI’s encroachment on roles like data entry and compliance. Yet, AI adoption isn’t entirely negative. Teresa Heitsenrether, leading JPMorgan’s AI initiatives, stated that AI has so far been augmenting roles rather than replacing them outright.

Despite challenges, some positive signs are emerging. By late December 2024, unemployment claims in the U.S. had dropped to their lowest levels since April, indicating underlying resilience in the labour market.

The future of the labour market will depend on how businesses adapt to technological advancements, economic recovery, and government policies in the months ahead.

Now Some Positives….

The World Economic Forum (WEF) released a comprehensive research report on Wednesday, outlining key factors expected to influence the future of jobs in India by 2030. The study takes into account critical elements such as geopolitical tensions, climate change mitigation efforts, and technological advancements. Notably, Indian businesses are set to make significant investments in robotics, autonomous systems, and artificial intelligence (AI), which are anticipated to reshape the job market.

The WEF’s ‘Future of Jobs 2025’ report forecasts that India will see the fastest growth in job categories such as Big Data Specialists, AI and Machine Learning Specialists, and Security Management Specialists. These fields are set to dominate the employment ecosystem as industries continue to embrace emerging technologies.

In an effort to address the growing demand for talent, the report reveals that 67% of companies in India are prioritising diverse talent pools, compared to 47% globally. Additionally, 30% of businesses are adopting skills-based hiring practices by eliminating degree requirements, a significant increase over the global average of 19%.

The report underscores key trends shaping India’s workforce, including expanded digital access, geopolitical dynamics, and climate-focused initiatives. Mirroring global trends, Indian companies are ramping up investments in AI, robotics, autonomous systems, and energy technologies. A notable 35% of Indian employers foresee semiconductors and computing technologies revolutionizing operations, while 21% anticipate transformative breakthroughs in quantum computing and encryption.

India is outpacing global averages in AI adoption, with 96% of organizations already implementing AI programs compared to the global benchmark of 88%. This surge in demand for AI skills has placed India and the US at the forefront of generative AI training enrollments on platforms like Coursera. Corporate sponsorships have been instrumental in encouraging greater participation in these training programs, the report highlights.

Drawing from the insights of over 1,000 enterprises employing more than 14 million people worldwide, the research sheds light on the evolving job market, shifting skill demands, and strategic workforce adaptations necessary to thrive in a rapidly changing scene.

Additionally, the report addresses demographic trends influencing the global labor market. With aging populations shrinking the workforce in higher-income nations, countries like India and those in Sub-Saharan Africa—with their expanding working-age demographics—are expected to contribute nearly two-thirds of new workforce entrants in the years ahead.

The Last Bit

• The Indian IT sector’s resilience and adaptation to global trends indicate a positive outlook for 2025. While the U.S. job market’s struggles might influence certain sectors, India’s focus on fresher hiring, specialised roles, and technological advancements positions it well for growth. However, as AI continues to evolve, industries must balance innovation with workforce stability to outshine the other wise tough scenario.

• While the salary story paints a grim picture, the specter of layoffs is an even more significant concern for 2025. Industries, especially tech, are still reeling from workforce adjustments made in 2024. Companies are recalibrating their workforce needs, prioritizing roles that align with new technologies and cost-saving measures. As a result, layoffs could dominate headlines, leaving employees across sectors on edge.

• Amid this backdrop, certain roles are poised to gain prominence. As businesses adapt to digital transformation and sustainability goals, jobs in AI, machine learning, data analytics, and green technologies could see increased demand. While these opportunities bring hope, they’re unlikely to offset the widespread caution permeating the job market.

• For now, 2025 seems to be a year where employees need to manage expectations—whether it’s about pay hikes or job stability. While some sectors offer a glimmer of hope, the overarching narrative remains one of prudence and restraint. So, will your pay package be heavier? Perhaps, but only marginally. And as for layoffs, staying agile and upskilling could be your best defense in a year that promises to test resilience.