Artificial intelligence is poised to severely disrupt India's job market — as it will the rest of the world. But the scale of job losses remains uncertain, as does India's ability to build a thriving AI ecosystem that could generate new opportunities to offset them.
And, when it comes to understanding what lies ahead, history offers little guidance.
The International Monetary Fund (IMF), in its 2024 report, said automation and IT integration in the past were different, affecting “predominantly routine tasks”, whereas AI threats can “extend to cognitive functions”. “As a result, even high-skill occupations, which were previously considered immune to automation because of their complexity and reliance on deep expertise, now face potential disruption,” it warned.
What's different
A World Bank report of October 2025 too highlighted that “unlike previous waves of automation, AI has the potential to displace a range of non-routine, white-collar service sector jobs”.
Per Economic Survey 2025-26, “early evidence” from advanced economies temper some of the more extreme jobb predictions and “provide some reassurance", especially for labour-abundant economies like India.
It drew attention to the fact that India’s non-agricultural labour market depended heavily on white-collar services jobs, with the ICT-BPM (Information and Communication Technology - Business Process Management) market generating 5.4 million jobs and contributing 7.5 per cent of GDP in 2023.
The good news is, the Economic Survey of 2025-26 pointed to recent studies to observe that “early evidence” from advanced economies had “begun to temper” some of the more extreme predictions on job loss and “provide some reassurance in the near term, especially for labour-abundant economies such as India”. It, however, gives no assessment of the actual impact on India.
Magnitude of threat
The NITI Aayog’s October 2025 report “Roadmap for job creation in the AI economy” is more specific. “In a business-as-usual case, there will be a downside," it says. "In the worst-case scenario, the headcount in the tech services sector could go down from 7.5-8 million in 2023 to 6 million by 2031. Similarly, the headcount in the CX (customer service) sector could go down from 2-2.5 million in 2023 to 1.8 million.”
New opportunities from AI disruption
♦ New jobs like data centre controllers, AI DevOps engineers, ethical AI specialists, sentiment intelligence analysts
♦ Quantum ML and neurohaptic engineers on the rise
♦ Expansion of India's global capability centres
♦ Drug discovery, IoT and smart cities opening new roles
It cites data to say that over 60 per cent of formal sector jobs are “susceptible to automation” by 2030, particularly in the IT and BPO sectors. But it also adds a caveat: “Whether our industry is a net employer or a net loser of jobs depends on the actions we take.”
The Aayog lists several emerging opportunities from the use of AI in drug discovery, self-governing systems for predictive maintenance or demand-based supply planning, especially for manufacturing companies, convergence of Internet of Things (IoT) and AI (IoT+AI or AI IoT) in manufacturing and smart cities, quantum computing research, AI DevOps (combining software engineering, cloud and machine learning); expansion of Global Capability Centres (GCCs) etc. Jobs on the rise
It also lists specific jobs emerging, like data centre controllers, AI marketing specialists, ethical AI specialists, sentiment intelligence analysts (decoding emotional and behavioural signals from customer interactions), quantum ML engineers, neurohaptic engineers and ‘AI for AI’ or advanced research scientists and AI engineers who are creating next LLMs, SLMs and other protocols.
In addition, it suggests, particularly for IT services, quickly adapting to new realities at different levels: for juniors to ramp up AI skilling quicker and focus on logic, for middle management to focus more on strategising and for upper management to new roles as AI stack architects and prompt engineers, and greater emphasis on critical thinking rather than domain-specific skills.
It takes note of the three challenges of the sheer scale of the job displacement risk, the fundamental shortcomings in education and skills development, and a widening gap between supply and demand for AI talent. It then recommends major steps (“three pillars”) to turn AI into a new opportunity for jobs and growth:
1. Embed AI in the education system (uniformly across schools and higher institutions, like China did in 2022 and integrate to industry).
2. Become a global AI talent magnet by bringing back Indian talent (44 per cent top AI researchers work abroad) using China’s Thousand Talents Plan, UK’s Global Talent Visa and Taiwan’s Yushan Fellowships, and set up AI centres of excellence providing autonomy to anchor their work.
3. Build an AI skilling engine (for reskilling current workforce, provide flexible AI masters, doctoral programmes).
How pan-Indian the AI boom is, however, remains to be seen. The World Bank report mentioned earlier said that only 5.8 per cent of India’s white-collar job listings require AI expertise and that the vast majority of such listings came from the “southern technology corridor” of Bengaluru, Hyderabad and Chennai, as also Pune (all of them over 6 per cent share of AI jobs).
Financial sector: Emerging threat
AI is finding a major role in financial services. The Economic Survey of 2025-26 highlighted that global financial markets are grappling with the impact of AI.
It referred to an IMF report to assert that their heavy investment in AI stocks brings “a higher likelihood of herding behaviour in financial markets, as global investors use similar AI models”.
Closer home, India's financial sector is still in the early stages of putting AI to work. Only around 21 per cent of banks and financial institutions — mostly larger ones — are currently implementing or developing AI solutions. Where AI is being used, the focus is on practical applications: streamlining internal processes, enhancing customer interactions through basic chatbots, generating leads, and supporting internal decision-making. More complex, autonomous AI-driven decision-making remains largely out of scope for now.
Sectoral trends
The Citygroup’s June 2024 report on AI adoption presented a scary picture about the US financial sector (also other industries) – which policymakers must keep in mind. It said US banks were the most vulnerable to AI-automation with 54 per cent jobs at risk of displacement, as against the potential to create 12 per cent new jobs. This was followed by insurance at 48 per cent (against 14 per cent addition) and capital markets at 40 per cent (against 14 per cent addition).
Other high-risk industries included energy, retail, and health. These jobs typically involve data analysis, compliance, reporting, customer service, risk management, HR etc.
In India, AI is making rapid strides into many other sectors: health (AI doctor), education (AI tutor), retail e-commerce, agriculture (monitoring weather, soil and crop conditions) etc., democratising access, eliminating or lowering costs of such services and creating new opportunities for growth and development.
Win some, lose some
Meanwhile, domain experts are not worried over job loss.
Ashwani Rath, tech expert and entrepreneur, is optimistic that AI will not eliminate jobs in net terms but restructure them with new categories of work expanding in the areas of AI development, governance, cybersecurity, data management, workflow integration and domain-AI collaboration.
“The impact will be more visible in hiring shifts and role redesign rather than immediate mass layoffs," he told The Federal. “The real concern is not job loss, but the speed of disruption. AI can impact multiple sectors at once, compressing decades of change into a few years. India’s priority must therefore be rapid, large-scale reskilling. If we build strong, continuous learning systems aligned with industry needs, AI can become a massive job creator. If we don’t, short-term inequality and displacement could rise."
Sandeep Narula, chairman of the Electronics & Computer Software Export Promotion Council of India, said there would be job loss in some verticals and gains in some others, with jobs “shifting from processing to problem solving”.
