MUMBAI: As generative artificial intelligence (GenAI) reshapes India’s $350-billion information technology sector, projected to reach that size by the end of the year, concerns about large-scale job losses have intensified.
A study, published earlier this month, by economic think tank Indian Council for Research on International Economic Relations (ICIER) found that a majority of Indian IT sector workers worry AI could replace their jobs.
Titled AI and Jobs: This Time Is No Different, the report is based on a survey of 651 firms across 10 cities conducted between November 2025 and January 2026. It found that 65% of companies reduced hiring after adopting GenAI, as fewer fresh recruits were needed to handle similar or higher workloads aided by AI tools.
Despite slower recruitment, aggregate headcount increased, suggesting companies are adjusting hiring strategies rather than reducing their workforce, the report said without detailing any absolute numbers.
The impact has been most visible at the entry level. According to the report, 55% of firms scaled back fresher hiring as AI automated routine coding and testing tasks previously handled by junior employees.
At the same time, demand for mid-level skilled roles rose, with 42% of firms reporting growth in such positions, which the report linked to demand for workers able to integrate AI tools into workflows. Senior roles largely remained stable, with 82% of respondents reporting no change in hiring at that level.
AI boosts demand for technical roles
The report also found higher hiring momentum in occupations with greater exposure to AI, including software analysts, developers, application developers and statisticians.
Roles with higher AI exposure showed stronger hiring trends, a trend the report said suggests companies are deploying AI alongside human workers rather than replacing them outright.
Productivity gains were also reported. Software engineering teams delivered better output performance even where staffing levels declined, while core technology divisions such as cloud services saw comparatively smaller workforce reductions despite significant AI adoption, as per the report.
Skills race intensifies as training lags
Hiring priorities are shifting towards workers with combined domain expertise and AI capabilities, with 63% of firms changing recruitment strategies accordingly. Prompt engineering emerged as the most sought-after capability, cited by 68% of firms, followed by data analytics (36%) and machine learning (35%). Meanwhile, 32% of companies reported that routine roles such as data entry were being phased out.
Upskilling efforts, however, remain limited. Only 4% of firms said they had trained more than half their workforce in AI-related skills, with companies citing shortages of qualified trainers (70%) and high costs (68%) as key constraints.
“We are seeing a shift in how work is organized, where AI appears to be complementing human talent. This data offers a window into the transition underway in India. The focus now should be on the practical steps needed to help workers align their skills with the advancing capabilities of AI. Currently, only 4% of firms have trained more than half their workforce in AI, presenting a huge opportunity for growth,” said Ronnie Chatterji, chief economist, OpenAI.
Looking ahead, 44% of firms expect no change in headcount, while 28% anticipate growth and 27% foresee reductions. The report recommends expanded training initiatives, increased research and development investment, and clearer regulatory frameworks to support AI adoption.
