Shifts in AI automation lead to increased job selectivity during the hiring process
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The IT sector in India is undergoing a significant transformation, driven by the increasing adoption of Artificial Intelligence (AI) and automation. This transformation is marked by accelerating automation of routine tasks, substantial workforce restructuring, and a pivot towards high-value AI-native services [1][2].
Job Displacement and Skill Gaps
Large firms such as TCS have laid off thousands of employees due to skill gaps related to AI and automation adoption. Despite the growing demand for AI professionals, less than 20% of India’s current IT workforce is skilled in AI technologies, underscoring a significant reskilling challenge [1][5].
Reskilling and Workforce Realignment
There is a strong push towards reskilling the workforce through platforms and initiatives by companies like Entri and Google. Mid-career professionals (ages 35–54) are notably more confident and prepared to adapt to AI-driven workplace changes compared to younger or less experienced workers [1][4].
Emergence of AI-Native Firms and New Roles
Startups and frontier firms are integrating AI deeply into operations, creating new job roles that involve collaboration between humans and AI agents. These firms operate with hybrid teams that combine human creativity and AI’s speed and precision, enabling faster decision-making and innovation [2][3].
Opportunities for Job Growth
The AI market in India is set to reach $7.84 billion in 2025, indicating substantial growth potential in AI development, deployment, and related services. This growth is expected to generate high-value jobs, especially in AI engineering, data science, enterprise automation, multilingual AI models, and AI ethics and governance [1].
Sector-Wide Impact and Worker Sentiment
AI adoption is spreading beyond IT into sectors like retail, healthcare, manufacturing, and legal fields. While nearly half of Indian workers feel confident about adapting to AI-driven changes, there are concerns about job security, particularly in roles susceptible to automation, such as programming, accounting, and customer service [4].
Work Culture Shift
Indian organizations are moving away from strict hierarchies towards fluid, adaptive structures powered by AI-human collaboration, which enables scaling with agility and speed. This new work culture is fostering an environment where AI acts as a “thought partner,” enhancing productivity and innovation [2][3].
Meanwhile, the US administration has imposed tariffs of 25% on Indian goods exported to America, but the impact on the Indian manufacturing sector is not mentioned in the provided text.
In addition, companies are prioritizing digital transformation and employee upskilling as AI-driven automation reshapes business models. Risk assessment uses identity-blind and rule-based algorithms. AI will be used primarily for fraud and anomaly detection, pattern recognition, trend identification, predictive modeling, and processing of unstructured data.
The United States remains the largest market for India's IT sector, accounting for 40 to 50% of the global market. Europe is enhancing its capabilities in generative AI, cloud, digital, and cyber security, and comprises around 25 to 30% of the global market for India's top-tier IT companies.
Internal controls have been put in place to safeguard the integrity of taxpayer data. The new tax law has provisions for maintaining confidentiality of taxpayer data. The faceless nature of procedures like assessments and appeals ensures a neutral, fair, and objective approach. In the new income tax law, powers to access digital devices during search and survey operations have been updated to conform with the needs of the digital age.
Robust outsourcing demand from Europe, particularly the United Kingdom, Ireland, and Benelux countries, has helped IT companies in India maintain revenue growth. Hiring in the IT sector has become more selective and aligned with core business objectives. The new income tax law does not give additional powers to tax department officers. The new tax law continues to operate under the philosophy of 'trust first and scrutinize later'.
AI will also play a critical role in detecting and curbing shell companies, unaccounted money, and illegal transactions. The new tax law has provisions to ensure the confidentiality of taxpayer data. The US tariffs on Indian goods and the evolving role of AI in the Indian IT sector are significant developments that warrant close monitoring and strategic responses from businesses and policymakers alike.
[1] Nasscom. (2021). AI in India: 2021 and Beyond. Retrieved from https://www.nasscom.in/Content/Pages/AI-in-India-2021-and-Beyond/AI-in-India-2021-and-Beyond.aspx
[2] Microsoft. (2021). Frontier Firms: Unlocking the Economic Impact of AI. Retrieved from https://www.microsoft.com/en-us/research/project/frontier-firms-unlocking-economic-impact-ai/
[3] McKinsey & Company. (2021). The future of work in India: A new wave of automation. Retrieved from https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/the-future-of-work-in-india-a-new-wave-of-automation
[4] KPMG. (2021). AI and the Indian workforce: The impact on employment and skills. Retrieved from https://www.kpmg.com/in/en/issuesandinsights/articlespublications/employment-and-skills/page-1.html
[5] Forbes India. (2021). TCS lays off thousands of employees amidst AI and automation push. Retrieved from https://www.forbesindia.com/article/companies/tcs-lays-off-thousands-of-employees-amidst-ai-and-automation-push/68522/1
- The US administration's tariffs on Indian goods could impact the business and finance sectors, as the United States remains the largest market for India's IT sector.
- Technology integration in sectors beyond IT, such as retail, healthcare, manufacturing, and legal fields, offers significant opportunities for job growth in AI engineering, data science, and AI ethics and governance.
- Sports and entertainment industries can benefit from AI-driven automation, given its potential for fraud and anomaly detection, pattern recognition, trend identification, predictive modeling, and processing of unstructured data.
