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How Will Artificial Intelligence Impact the Job Market in India?

Artificial Intelligence (AI) is changing the Indian job market, creating great opportunities and major problems. In this article, you'll learn how AI is changing employment in industry sectors, what jobs are most affected and what India needs to do, now, to take advantage of AI for broad 

AI and Job Displacement: A Real Concern

• The trend of using AI-based automation has gained rapid traction, especially for startups and IT companies. Between January and May 2025, for example, Indian startups laid off more than 3,600 employees due to automation and cost cutting. Machines are now taking on a lot of repetitive, rote work, resulting in many traditional jobs being exposed to automation.
• A survey conducted at IIM Ahmedabad points to the presence of pervasive anxiety surrounding the process of automation. 68% of employees surveyed are worried their job will be partially or completely automated in the next five years, while 40% believe AI will render their skillset completely useless. Different sectors, including banking, are actively pursuing the rapid implementation of AI solutions, particularly for large and well-capitalized institutions.
  
  

The Evolving Nature of Work and Skills

• While this is a concern, India's employment challenge is greater than just job creation—it's increasingly about upgrading the skill set of its workforce. The rate of change in required skills for roles exposed to AI is now significantly higher—greater than double what it was a year ago. Critical thinking, creativity, and subject matter expertise are becoming more valuable than narrow technical skills. Workers who can demonstrate proficiency in AI-related skills are now receiving substantial wage premiums across sectors. 
• Moreover, foundational and soft skills—like communicating, adaptability, and collaboration—are emerging as essential safeguards for technical knowledge. As AI automates basic knowledge work and processing of data, employees need to focus on the tasks that are reliant on depth, judgment, and innovation.
  
  

AI as a Job Creator: The Opportunity

• While fears of mass unemployment abound, several industry analyses and official reports highlight AI as a significant driver of job growth. The World Economic Forum predicts net positive job effects from AI and that by 2025 it will create 12 million more jobs around the world than it displaces. In India, it is projected that digital interventions (including AI) will move approximately 40–45 million workers through reskilling and create up to 20 million new jobs, particularly in niches such as IT, manufacturing, logistics, agriculture, and cybersecurity. 
• In fact, the job market in India is expected to register 9% growth in 2025, largely driven by technology, such as AIs, machine learning, and cybersecurity. Demand for AI/ML and data science jobs is up 39% in the past year, and the most common jobs listed in high demand are application developers, software developers, and cybersecurity professionals. With cities like Jaipur, Jodhpur, and Udaipur experiencing dramatic spikes in tech job hiring as well, it signifies a broadening of opportunities in cities that were previously not associated with tech. 
  
  

Sector-wise Impact

AI-based technology has different effects in different industries:

• Technology and IT: The industry's rebound continues to accelerate, mainly brought about through AI and data science. There has been considerable growth for positions in generative AI, natural language processing (NLP), and big data analytics.

• Banking and Finance: A traditional back office is all about performing mundane administrative tasks that white-collar workers view as menial and feel a little too worthy for such tasks. Trainings on the jobdy deployments are hence considered very risky and complex. Today, automation of such mundane tasks is highly sought. However, development of judgment in areas such as AI-based risk assessment, fraud detection, and personalized financial products is highly 

• Retail and consumer goods: Automation and AI-based analytics are changing the ways organizations are managing supply chains and inventory, creating demand for roles based on data driven decision-making and customer experience.

• Health, manufacturing, and logistics: Process automation, robotics, and predictive analytics are creating demand for engineers, analysts, and technicians to adopt and co-create functions that operate alongside AI.

• Agri-tech: AI-based solutions are changing the way crop yield and distribution occurs will require functional knowledge of both agriculture and technology.

The Paradox: Job Loss vs. Job Creation

• AI creates an "automation paradox." It may eliminate jobs, but it also creates jobs and adds value to jobs. For example, AI tools are able to automate the data input, but also create the need for data scientists, engineers and executors that can develop, deploy and manage the use of AI systems. More generally, AI also can increase productivity that will lead to economic growth and new and unforeseen types of employment to serve the economy.
• If India will experience net job losses or net job creation will depend on how fast people in the workforce can respond and how well the economy can create elastic demand, or in other words, where some technology is growing the amount of economic activity instead of just replacing the human role.

The Education and Reskilling Imperative

India's potential to take advantage of the AI Revolution depends on closing the skill gap. The Economic Survey 2025 recognizes that aligning educational programs to industry needs is urgent. There must be effective engagement and collaboration between academia and business in order to equip students and workers with AI-ready skills.

When thinking about reskilling and upskilling programs, several factors should be taken into account first:

• AI and Data Literacy: A basic understanding of machine learning and algorithms, analytical thinking, and data analytics.

  
  
• Soft Skills: Creativity, critical thinking, adaptability and emotional and other intelligence.

  
  
• Domain Knowledge: Value-added domain deep knowledge combined with AI (health analytics; fintech; agri-tech).

  
  
• Experiential Learning Opportunities: Access to internship, hands-on project learning and experiential activities (in relevant sectors that involve AI).

  
  

Regional Shifts and New Opportunities

Tier 2 cities are emerging as new talent centers. While markets such as Bengaluru and Coimbatore will always keep their top leaders on the tech jobs market, expect also Cities like Jaipur, who are showing a whopping 38% to 43% growth in tech jobs posted in the last Quarter and Market activity is now more reflecting the digital transformation of clients outside Tech, whether they be Financial services or Healthcare, whilst remote and connected work enabled more talent to join as professionals into the work force in technology; who being outside of big metro, are able to engage digitally to leverage AI and other digital tools to democratize opportunities for more and more of their fellow Indians.

Embracing the AI Revolution: Strategies for India

To maximize the promise of AI in the labor market, a collaborative effort needs to be made:

•  For Employees: Proactively reskill yourself and keep up to date on what is happening with AI. Embrace lifelong learning, and maintain, develop and improve technical and soft skills. 

• For Employers: Invest in your employees, training, and change management. Redesign jobs to focus on human-AI collaboration, and not human-AI replacement. 

• For Policymakers: Reward policies that promote education redesign, workforce reskilling, and adjustments to social safety net programs for dislocated workers. Support public-private partnerships to ensure an easy transition.

  
  

Conclusion

Artificial Intelligence is changing India’s employment landscape. Some jobs will go, but many new jobs will exist for those who are ready. The rate of change is daunting, but also presents opportunity. Since India has a young workforce, and the proper investments in reskilling and inclusive growth policies, we have a great opportunity to benefit from the tremendous advantages involved in an AI-led economy. If we embrace agility, adaptability, and quality, we can reposition the threat of AI disruption as a positive opportunity for unlocking further economic growth and social mobility.