How to embrace AI: Indian IT firms gear up for the reskilling challenge | Industry News

On the other hand, there is optimism that the technology will lead to huge productivity gains, create a small number of highly paid AI jobs and offer opportunities for the traditional IT industry to get back in the game by transforming their business.

NITI Aayog, the government think tank, estimates that the AI juggernaut could lead to tech jobs falling by up to a fourth — from 7.5 to 8 million in 2023 to 6 million in 2031 — and customer experience jobs falling from 2-2.5 million to 1.8 million in the same period. That’s until reskilling and investment in talent development is undertaken, especially because as much as 60 per cent of the formal sector jobs in the country would be susceptible to automation. 

The IT industry, which faces the brunt of the disruption, is not waiting — it has started rationalising and reducing its workforce.

The top five IT companies, TCS,Infosys, HCL Tech, Wipro and Tech Mahindra, saw an  overall headcount contraction of 6,981 in FY26, compared with an increase of 12,798 in the previous year. Much of it was due to 23,000 job cuts by TCS and a sharp slowdown in growth for others. 

Dean of global business at Fletcher School in Tufts University Bhaskar Chakravorti, who studies AI’s impact across countries, estimates that nearly 2 million jobs will be lost in India in the next five years after accounting for new jobs created. “Nearly 3 million gross jobs are at risk. Overall this means a loss of $12 billion a year in lost wages,” he points out. 

Shiv Shivakumar, operating partner in global PE giant Advent International and a board member in various Indian companies, warned that in the next 36 months nearly 25-40 per cent of jobs will be under threat from AI and job losses are inevitable.

The speed at which Indian companies adopt AI will determine how disruptive its impact is. The bigger, mostly listed and innovative companies are taking the lead but a majority are taking tentative steps, still unclear whether they will get returns on their investment by moving to AI. 

A study of India’s top 35 listed companies by Bengaluru-based AIM Research in May says that only three of them are in the pilot stage of AI implementation, while 19 are in the operational stage. As many as 11 firms are scaling AI use across functions. The top two, Reliance Industries and HDFC Bank, are in the transformation stage where they run their native AI operations.

AIM sees clear trends: In banking and financial services companies like HDFC Bank, ICICI Bank, Bajaj Finance and SBI are far ahead of public sector insurers and smaller non banking financial companies in AI adoption. In telecoms, Jio and Bharti are in the forefront, with Vodafone Idea having some catching up to do. Similarly in pharma and healthcare, generic-only players are far behind Sun Pharma, Dr Reddy’s and Apollo Hospitals. In auto again, the big boys like Maruti Suzuki, Tata Motors and Mahindra & Mahindra lead. 

A report, ‘State Of AI in Indian Enterprise’, conducted by knowledge platform CIO & Leader, based on interviews with 300-plus tech leaders between May and June this year, concludes that over 60 per cent of the companies have AI induction at the pilot stage despite two to three years of consistent investment in this space. Only 12 per cent of the companies were able to see any significant measurable return on their investment. A substantial 57 per cent have no measurable return on investment or cannot determine whether there is any return at all. 

The problem might be in how companies are going about adopting AI. Said Shivakumar: “There is some kind of a fear of missing out (Fomo) about AI among corporates. So what companies are doing is earmarking a certain percentage, say 5 per cent, of its existing  IT budget for AI, while the chief technology officer continues to protect his legacy IT system. However, start-ups and new companies are starting full throttle on AI, which is the right approach.” 

Strong votaries of AI, especially the companies on the forefront of the revolution, argue that fears of the great India job loss is not borne out on the ground. A Nomura study on the impact of AI on jobs published this month says that while India added 83,100 AI-related jobs, the jobs lost were 32,921 across AI roles from 2023 to August 2026. 

Based on a survey of 651 IT companies, Icrier, supported by Open AI, said in February that there is no evidence to support predictions of large-scale job losses due to AI in IT. 

But Icrier said there is a problem at the entry level — 55 per cent of the companies agreed that they have seen a reduction in entry-level jobs in the last two years.  Responding to a question on whether AI has led to a change in the number of workers the company is hiring now at the entry level, 65 per cent said there has been a decrease. 

One way out of course is to reskill existing employees but that is not easy. The Icrier research shows that 68 per cent of the companies feel the high cost of retraining and uncertain return on the investment are a problem. 

Shivakumar said: “It makes sense for you to reskill if you are growing at 100 per cent, but if AI has helped you grow by 10-12 per cent there is no business case for reskilling.”     

Chakravarti said: “Firms train the people they keep, not the people they displace. And given the pace of the AI transformation it is unclear what new skills they can be taught so that they remain productive. Also AI eats up jobs in the higher income bracket, making it difficult to retrain mid-career employees.” 

One other way is to force corporations to bring in more transparency on the job scenario. Economists say companies should disclose jobs at risk and those eliminated due to AI in their balance sheets and not hide these numbers behind other reasons. A senior economist said: “One key problem now is that while carbon can be metered and is mandatorily declared, a job lost to AI cannot be verified. That should change.”     

But Venkatesh Bala, former adjunct professor in Columbia University, an independent advisor on AI Analytics and president of New York-based Bala Consulting, said, “Demand for IT services is likely to grow robustly as enterprises in the US, UK and elsewhere convert employee-level AI productivity gains into enterprise effectiveness.” 

He points out that demand for IT services will be pushed by new IT needs arising from AI, including cyber security, data engineering, AI governance and agent supervision. “Indian AI firms are well positioned to transform themselves to providers of high value AI related professional services and capture this new demand.”     

But there are also areas to ponder — Bala said AI could widen the gap between a relatively small number of highly skilled AI workers and the larger pool of traditional IT workers whose skills are becoming less scarce.

Clearly, AI is a big disrupter. 

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  As many as 2-3 million jobs could be displaced due to AI in the next few years, beginning with IT
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  60% of formal sector jobs are susceptible to automation
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  Top 35 companies in the country are leading in AI adoption, but the majority of corporates are still in the pilot and experimental stage
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  55% of companies report a decline in entry-level jobs over two years
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  Investing in reskilling could be a solution — but ROIs might not justify it