India, Oct. 4 -- While Indian newspapers scream about IT layoffs and social media amplifies the doom, Morgan Stanley just upgraded TCS to 'overweight.' Goldman Sachs maintains its 'buy' rating on Infosys. Smart money is flowing into the very companies supposedly in crisis. Either the world's sharpest financial minds have lost their edge, or something else is happening. Gaurav Dua, Chief Investment Officer at Standard Chartered Securities is among those convinced the noise is a distraction. Take those terrifying 42,000 layoffs across India's top 4 IT companies in the headlines now. It happened across companies that employ roughly 1.5-2 million people. That's just 2-3% of their workforce. When extrapolated to the Indian IT industry which employs 6 million people, the layoffs begin to look like a blip. Beginning with these numbers, the story that emerges is a fascinating one: Indian IT has been here before many times over. To figure where it all begins, let's go back to 1969. Long after FC Kohli retired, he spoke about it with me from his Churchgate home. He recalled coming back to India from the US as a freshly minted engineer and joining a then small division of the Tatas called Tata Consultancy Services. Back then, TCS was intended to be an entity helping Tata Group businesses with basic computing needs. Mainframe computers were room-sized machines that cost fortunes, and software was something you got free with hardware. The idea that India could export software seemed absurd. But Kohli had a radical vision: Build intellectual capital. He wasn't talking about some distant tomorrow-he was betting that India's engineering talent could compete globally in an industry that barely existed. He started work to build India's first software export unit. The early years were brutal. Indian programmers earned a fraction of their Western counterparts. Clients questioned whether Indians could handle complex projects. Kohli persisted, established partnerships with international companies and proved Indian engineers could deliver world-class software at competitive costs. The industry kept growing. But the low costs it charged to gain a toe hold earned Indian companies a reputation for being low cost 'labour contractors'. This 'body shopping' model kept margins thin and respect low. Everything would change in 1989 when Infosys, founded with just Rs.10,000, faced an existential crisis. General Electric had become their largest client and accounted for 25% of Infy's revenues. For a company with less than 1,000 employees and minimal cash reserves, losing GE meant potential bankruptcy. GE insisted on a pricing model that Narayan Murthy thought of as disastrous. Old timers recall how Murthy refused to budge and decided to walk away from the negotiations. The immediate cost was brutal. Infosys nearly collapsed. But he sent a message: Indian companies would now compete on value, not just price. This single decision forced everyone to invest in quality processes, training, and innovation. It laid the foundation for the industry's evolution from being cheap labour providers to trusted technology partners. Just as the Body Shopping model collapsed, so did a series of 'industry-killers' over the years: Y2K (1999-2000): The millennium bug needed fixing millions of lines of code worldwide. Indian companies dominated this market. Critics argued it was a one-time opportunity. What would they do after Y2K was solved? Turns out Y2K was used as a training ground for handling complex global projects and building client relationships that lasted decades. Dot-Com Crash (2000-2002): Technology spending collapsed globally. Indian IT was supposed to die with the dot-com boom. Instead, recession-hit Western companies discovered outsourcing as a survival tool. Cost pressure became Indian IT's best sales pitch. 9/11 and Global Recession (2001-2003): Security concerns made companies reluctant to send work offshore. Indian companies responded by investing heavily in security infrastructure and obtaining international certifications that actually made them more secure than domestic providers in their home countries. 2008 Financial Crisis: This was supposed to end outsourcing permanently. Western companies would bring jobs home to support struggling domestic economies. Instead, the crisis made cost efficiency essential. Companies that had never considered outsourcing suddenly needed it to survive. The current narrative too follows a similar script. Companies are reducing routine maintenance programmers while desperately hunting for AI specialists, cloud architects, and data scientists. This isn't decline. It's evolution. The investment community understands something that headline writers miss: transformation isn't tragedy. Foreign institutional investors increased their IT stakes by 12% in Q2 2025 even as layoff stories peaked. Domestic mutual funds allocated Rs.15,000 crore to IT stocks. The layoffs then are statistical noise. The real question isn't whether Indian IT will survive this transition. History suggests it will thrive. The question is whether observers will recognize transformation when they see it, or mistake evolution for extinction. The smart money has already decided....