A heavy, brooding charcoal-grey cloud hovers over a multi-storey commercial building standing tall near the service road of the busy Vyttila-Edappally bypass in Kochi on a Tuesday morning.

Down in the basement of the building sits Fatima*, a 35-year-old woman, on the granite steps at the entrance of what once used to be her workplace. The glass door remains shut behind her, and Fatima stares at an uncertain future, her forced smile failing to hide the unease within.

A senior medical coder at CorroHealth Infotech Private Ltd., a U.S.-based health-care analytics company, Fatima has worked from 9 a.m. to 6 p.m. for the past four years. Her routine changed on July 3, 2026 as the company shut its operations in Kerala, a decision that shocked around 800 employees.

“Nowadays, some of us come here in the morning, sign an attendance register arranged by the district labour office, sit here for some time and leave. We are just following the instructions of government officials. We really don’t think the company is going to reverse its decision,” a disappointed Fatima says.

“It all feels like a nightmare now,” she says, recalling the “lay-off” horror on July 3, 2026.

“None of us could believe what the HR (human resources) representatives said. Some of us even felt choked and rushed out of the office for some fresh air. By the time we tried to re-enter, our access was blocked,” she remembers.

The company retrenched the employees in its Kochi and Kozhikode offices, citing operational losses, in a move that triggered several uneasy questions on the job market, labour laws and perceived threats from artificial intelligence (AI).

In its ‘Separation and Full and Final Settlement Letter’ sent to the employees affected, CorroHealth states that it was “conducting a workforce restructuring exercise due to a sustained downturn in the company’s Hierarchical Condition Category (HCC) vertical.” In medical coding parlance, HCC refers to the grouping of similar diagnoses into one related category to be used in a risk-adjustment payment model.

The company paid a compensation amounting to salaries for two and a half months to the employees while terminating their services.

The retrenchment has snowballed into a major controversy with both the Kerala government and the Opposition political parties terming it illegal.

Similar crisis

Just a week after the CorroHealth incident, a similar crisis played out in another Kochi-based venture, Talrop Private Ltd., with its employees coming out against the abrupt shutdown of its “₹250-crore ecosystem company.” The closure of 21 start-ups operating under Talrop’s ecosystem has left over 300 employees jobless.

The company announced the closure by claiming it was “not built for the AI era,” triggering further questions about the impact of the cutting-edge technology across sectors, especially in the information technology (IT) industry. The closure led to protests by employees who have raised allegations of inordinate delay in payments. A few investors have also alleged cheating by the company. The employees have lodged complaints with labour offices in Ernakulam, Thiruvananthapuram, and Kannur against various Talrop companies for non-payment of salaries.

The back-to-back lay-offs come amid a similar global trend in the IT sector with Microsoft cutting roughly 4,800 jobs in the latest such instance. It is estimated that global business leaders across sectors have announced at least one-lakh job cuts linked to AI advancements since October 2025. The reasons cited by the companies for the cuts include AI overhaul, AI-driven operational streamlining and AI expansion move, all essentially meaning the same.

Though the circumstances that led to the sacking of employees of CorroHealth and Talrop look different, the plight of their employees appears eerily similar and distressing.

“I lost my job as soon as a home loan was sanctioned. We had decided to settle in Kochi and were about to start building a house as my husband too works in the city. After the company announced its closure, we cancelled the home loan application. At present, my priority is to find another job in the city and it doesn’t look easy,” says Sreelakshmi K., another employee of CorroHealth.

Fatima, meanwhile, is disappointed that she won’t be able to meet the family expenses, especially for her children, for now. She also has loans to pay back.

‘Not many opportunities’

“People like us are not able to relocate now. Though the juniors among us are ready to shift to other cities, there aren’t many opportunities in the field. Even when there are openings, companies are offering salaries much lower than what we have been getting,” Sreelakshmi laments.

They both refuse to believe that AI has taken away their jobs. So do the employees of Talrop.

“The management started peddling the AI narrative just about a week ago, though we had been facing salary payment issues for several months,” says an employee of Talrop, alleging that he has not been paid for the past 11 months.

Jones Joseph, CEO, Talrop, rubbishes the charges against the venture. “With the advancements in AI, it doesn’t require three engineers to develop an educational platform. Instead, it can be done in just three hours,” Joseph reasons, before blaming the West Asia war for escalating their crisis with disruptions in funds flow. He says the pending dues will be settled by October, 2026.

A section of the employees, meanwhile, believes that the CorroHealth crisis was the culmination of long-standing unrest between the management and the employees.

“The employees in Kochi and Kozhikode had several times flagged issues like long work hours and lack of cab services for those who have to stay back after usual hours. The employees’ fair demands may have provoked the management, especially since such issues were raised only from Kerala,” says a senior employee of the company, who was instrumental in mobilising political and trade union support for the retrenched workers. The company has not issued any official response to the development and allegations yet.

Impact of Labour Codes

Along with concerns over AI eating into jobs, the Kerala cases have also triggered debates over the impact of the new Labour Codes passed by the Centre though they are yet to be implemented in Kerala.

Bindhu Krishna, Kerala Labour Minister, says the management of CorroHealth violated the Industrial Relations Code, 2020, as it did not give prior notice to the government before deciding to wind up operations and hence could face legal action. The Code mandates companies with 300 or more employees to obtain government permission at least 90 days before closing an establishment.

She has sought the intervention of the Union Labour Minister to iron out the crisis.

Need for unionisation?

Trade Unions believe the current crisis calls for the mobilisation of the workforce in Kerala’s IT sector.

Centre of Indian Trade Unions (CITU) national president Sudip Dutta terms the termination of employees as illegal. He is also apprehensive about the actual impact of AI on the job market.

“There’s no substantial evidence that AI is replacing jobs. Big companies are willing to invest more in the AI speculative market than in the production of services and goods, eyeing higher returns. However, it has not shown any substantial result yet,” he argues.

“With the latest lay-off incidents, Kerala’s IT workers will now feel the need for unionisation in the sector,” he observes.

Sooraj Nidiyanga, State secretary, Karnataka State IT/ITeS Employees Union, echoes Dutta’s views. “The IT industry is seeing trends like juniorisation—laying off mid-level and senior employees and hiring juniors with lower salaries—as well as AI washing—termination in the name of the technology. Mobilisation of the workforce across IT ecosystems is the need of the hour to fight such acts legally,” he explains.

Anish Panthalani, president of Progressive Techies, a socio-cultural organisation of IT employees in Kerala, believes the sector is facing both advantages and disadvantages of the absence of the traditional type of unionism. “It may not always be practical to deal with multinational companies on matters such as working hours in strict union terms. At the same time, unions may be able to address several employee-related issues more effectively,” he says.

Panthalani admits that the recent lay-offs have triggered panic among sections of IT workers. He says the community is aware that routine IT jobs are being replaced by AI and certain companies have already initiated upskilling measures, and urged other firms also to follow the suit. Terming several instances of lay-offs, including the latest ones, as unethical, he stresses that the Progressive Techies protest against such moves.

Ranjith Balan, State president, All India Professionals Congress, also questions the “insensitive” manner in which lay-offs were effected in the two companies. “Job loss due to mismatch with AI skill sets appears to be inevitable. However, such scenarios should be handled sensitively. Governments, institutions and professionals have to address the skill gaps in the workforce together, besides ensuring better compensations, including extension of health insurance in case of a severance,” he suggests.

GTECH offer

The Group of Technology Companies of Kerala (GTECH), with around 300-member companies, meanwhile, extended an unusual goodwill gesture to the affected employees. In a meeting with Kerala Minister for Industries and IT P.K. Kunhalikutty, GTECH leaders said they will facilitate the redeployment of CorroHealth employees by collecting their resumes and creating a platform through which member companies can identify suitable candidates based on their current openings.

Ecosystem facilitators are, meanwhile, treading a cautious path when it comes to the AI question. The emerging automation trends and the resultant impact on the sector and job economy have prompted IT Parks to rethink their outlook.

“There is a threat perception, and it will take a couple of years to be clear where the sector is heading. We expect the size of companies to be smaller in the future while their numbers are likely to go up,” Susanth Kurunthil, CEO, Infoparks notes.

The Kerala government, on its part, has initiated conciliatory talks with the managements of both CorroHealth and Talrop.

The State Labour department is in the process of vetting the documents and obtaining the relevant details in the case of the two companies. “Our priority is to explore all options to retain the company in the State and protect the employees,” says an official of the department.

The government has scheduled yet another meeting with the company’s representatives and other stakeholders on July 20, 2026 while another round of talks with Talrop leadership is planned before July 25.

Fathima, Sreelakshmi and their former colleagues, as well as the IT sector of the State, are eagerly waiting for the outcome of the meeting to reboot their careers and lives.

(*Name changed to protect her privacy.)