By Innodata, a US-based data-engineering and AI-services company, laid off nearly 550 employees in India on 26 October 2026, with additional job cuts reported in the Philippines, according to HRKatha. The layoffs were marked by abrupt system lockouts and deactivation of official IDs. Employees lost access to company systems and received termination emails on personal accounts citing a reduction in business assignments, with the company stressing the decision was linked to operational requirements rather than individual performance.
Workers reported being unable to download payslips or complete exit formalities because access to HR portals was revoked. Termination letters mentioned final settlements would be processed once company assets were returned. In the Philippines, affected roles included raters, quality experts, team leads and managers. Online posts suggested the cuts were linked to declining service volumes from a major client project. Innodata has not publicly confirmed the total number of employees affected across India and the Philippines.
What Innodata does and why the cuts matter
Innodata is headquartered in Ridgefield Park, New Jersey and was founded in 1988. Its clients include Google, Microsoft, Amazon, Apple, Sony, HP, Boeing and Deloitte. The company employs over 10,000 people worldwide according to its 2025 annual report. The workforce is concentrated in delivery centres that handle data annotation, AI training data preparation and content services, which makes India and the Philippines central to its operating model.
The layoffs matter beyond the immediate job losses because they touch a workforce that trains AI systems. Innodata sells data engineering services to the very technology companies that are simultaneously automating annotation and quality-control tasks. When a data services firm cuts raters and quality experts, the question is whether client volumes have shifted or whether internal automation has reduced the need for human review. HRKatha reported that online posts linked the cuts to declining service volumes from a major client project, but Innodata has not confirmed that explanation.
What Indian employment law means for affected workers
The manner of the layoffs raises questions about compliance with Indian labour law. The Industrial Disputes Act 1947 governs retrenchment in many Indian establishments. Chapter V-B requires employers in certain categories to give notice and, in some cases, seek prior government permission before retrenching 100 or more workers. Whether those provisions apply depends on the nature of the establishment and the state in which the workers were employed. HR and payroll teams should not assume a single national rule applies.
The reported lockout of HR portals before employees could download payslips is a practical problem with legal implications. Indian payroll law requires employers to issue wage slips and Form 16 documents. Employees who cannot access these records may struggle to file tax returns or prove income for future employment. Affected workers should request written confirmation of their last working day, final settlement calculations and the date by which Form 16 will be issued. Employers facing similar restructuring should preserve employee access to payroll records for a defined period after termination, even when system deactivation is part of the exit process.
What the Philippines cuts mean for BPO and data services employers
The Philippines has a well-established business process outsourcing and data services sector, and its labour rules differ from India’s. The Department of Labor and Employment generally requires employers to provide advance notice of retrenchment and to demonstrate that the retrenchment is necessary to prevent losses or is due to redundancy. Affected roles at Innodata included raters, quality experts, team leads and managers, which suggests the cuts were not limited to entry-level positions.
For HR teams in the Philippines, the key lesson is documentation. Employers must be able to show the business reason for retrenchment, the criteria used to select affected roles and the separation pay offered. When a client project declines, the employer should document the volume reduction and the connection between that reduction and the specific roles eliminated. Employees who believe the process was not followed can raise concerns with the Department of Labor and Employment. The absence of a public statement from Innodata leaves room for dispute about whether the legal requirements were met.
What HR and payroll teams should check now
The Innodata case highlights three practical steps for HR and payroll teams in India and the Philippines.
First, verify that final settlement calculations include all statutory components. In India, that includes notice pay or pay in lieu of notice, leave encashment, gratuity where applicable and any retrenchment compensation required by law. In the Philippines, separation pay rules depend on the reason for termination.
Second, preserve access to payroll records. The reported lockout prevented employees from downloading payslips. Employers should schedule a payroll data export before system deactivation and provide employees with a written statement of earnings and deductions for the current financial year or calendar year.
Third, document the business reason. Termination emails cited a reduction in business assignments. That language matters because it frames the termination as operational rather than performance-based. HR teams should keep records of client volume changes, project closures and the selection criteria used to identify affected roles.
| Country | Reported roles affected | Key legal consideration |
|---|---|---|
| India | Not specified by role in HRKatha | Industrial Disputes Act retrenchment rules may apply |
| Philippines | Raters, quality experts, team leads, managers | DOLE notice and authorised cause requirements |
| Both | Access to HR portals revoked before exit | Payroll records and final settlement documentation |
The immediate concern for affected employees is recovering records, understanding the reasons behind the cuts and completing the exit process. Innodata has said final settlements will be processed once company assets are returned, but employees have reported difficulty completing exit formalities without portal access. HR teams should treat that sequence as a warning: deactivating systems before payroll data is delivered creates disputes that are harder to resolve after the fact.
Sources: HRKatha
Photo: Bogdanov 001 by Ivan Bogdanov, Public domain
