Generative AI is not causing widespread job displacement in India’s IT sector but is reorganizing work, boosting productivity, and shifting demand towards hybrid skill sets, according to a report by the Indian Council for Research on International Economic Relations (ICRIER) and OpenAI. The study revealed a slight decrease in entry-level hiring, while mid and senior hiring remained steady, with productivity gains from AI surpassing declines by a ratio of 3.5 to 1 in affected business divisions.
The report highlighted that firms are witnessing increased output with stable or reduced team sizes at a ratio of 3.5 to 1, indicating a positive impact of AI adoption. It emphasized that the moderation in hiring aligns with broader post-pandemic trends in the IT industry and is not solely attributed to AI adoption.
Surveying 650 IT firms across 10 cities, the report indicated a growing demand for candidates with a blend of domain expertise and AI or data skills, with 63% of firms expressing a heightened need for such hybrid profiles. Additionally, over half of the surveyed companies are actively supporting AI adoption through awareness programs or training initiatives, with 38% planning to do so in the future.
One-third of business divisions reported increased output and reduced costs, signaling that AI is facilitating more efficient scaling without significant job reductions. However, the report cautioned that despite the sector’s relatively smooth AI integration, many firms are inadequately prepared for future challenges.
Shekhar Aiyar, Director & Chief Executive of ICRIER, emphasized that while the results are promising, Indian policymakers should remain vigilant. The report revealed that only 4% of companies trained over half of their workforce in AI in the past year, citing challenges such as finding qualified trainers, high costs, uncertain returns, ethical and legal concerns, and organizational readiness.
