Future unbound: AI, jobs and India’s next growth pivot

New Delhi: Twenty-one-year-old Rehan, who works as a barber in Ghaziabad, is worried about his career after watching a video clip on social media showing a man getting a haircut from an automated machine.

“I don’t know what will happen to our work in five years,” Rehan said, expressing concern about his future livelihood. “If people can get a haircut from a machine, who will come to us?”

A video recently went viral on social media showing a man receiving a haircut from a street-side machine. Though the viral clip was AI-generated, it has sparked debate about the possibility of automated machines performing haircuts. The long-standing discussion about humans versus machines has taken on new urgency in the era of artificial intelligence (AI) and machine learning (ML).

According to an International Monetary Fund analysis, around 40% of the global jobs are exposed to AI. In advanced economies, the proportion of jobs likely to be impacted by AI is 60%. Of the exposed jobs, roughly half may benefit from AI integration leading to higher productivity, whereas the other half could disappear as AI applications may execute key tasks currently performed by humans. 

A report titled ‘Roadmap for Job Creation in the AI Economy’ released by NITI Aayog in October warned that India’s tech services sector faces the threat of significant job displacements by 2031. According to the report, the headcount in the tech services sector may decline to 60 lakh by 2031 from around 75-80 lakh recorded in 2023. Similarly, the headcount in the CX, or customer service, sector is likely to fall from 20-25 lakh in 2023 to 18 lakh in 2031.

However, the report highlights that if India acts strategically, tech sector jobs in the country could increase. The total number of jobs in the tech and customer service sectors could swell to 1 crore and 31 lakh, respectively. This means creation of around 40 lakh new jobs in the next five years.

“As AI reshapes the global economy, India stands at a critical juncture: we can either be disrupted by this wave or lead it with confidence and purpose. The choices we make today will determine whether we lose jobs in India’s tech sector by 2031 or create new, AI-enabled opportunities for our youth,” BVR Subrahmanyam, CEO, NITI Aayog, noted in the report.

While AI has already led to job losses in several sectors including software development, customer services, retail, media and finance, there is a huge talent crunch to take on the new roles created by it.

According to an analysis by staffing firm TeamLease Digital, there is only one qualified engineer available for every 10 open generative AI roles in India.

As more companies and organisations are opting for AI, the demand for skilled workforce in the sector is set to rise further. “This will put further pressure on the skill gap,” Indian Institute of Management (IIM) Ahmedabad Director Bharat Bhasker told DH in an interview recently.

As per a joint report by Nasscom and Deloitte, India’s AI talent base is expected to grow to 12.5 lakh by 2027 from 6-6.5 lakh in 2022, recording a compound annual growth of 15%. However, the AI market is expected to grow at a rate of 25-35%, signaling a further widening in the demand-supply gap in the talent pool.  

“The world is snapping up AI specialists faster than ever, yet most jobseekers are still training for roles that will be challenged by AI soon,” said Jaideep Kewalramani, chief operating officer (COO) and head of employability business at TeamLease Edtech.

India first in AI skill penetration

India is home to 16% of the world’s AI talent. According to the Stanford AI Index 2024, India ranks first globally in AI skill penetration with a score of 2.8, ahead of the US (2.2) and Germany (1.9). AI talent concentration in India has grown by 263% since 2016, positioning the country as a major AI hub. India also leads in AI skill penetration for women, with a score of 1.7, surpassing the US (1.2) and Israel (0.9).

AI is reshaping the way industries and organisations operate. It has also led to the creation of jobs that did not exist earlier.

Roles such as AI prompt engineers and sustainability data analysts, which were virtually unheard of five years ago, are now in big demand.

According to the NITI Aayog report, AI is expected to create upward tailwinds in the long run by unlocking new roles, technologies and use cases. Hyper specialisation in tech is likely to lead to job creation of three broad kinds: Enterprise AI Skills, Frontier AI Skills and ‘AI for AI’ skills.

Enterprise roles include AI prompt engineers, AI architects and AI for IT operations. Frontier AI roles involve cutting-edge work in areas like robotics, computer vision and large models. The job roles include Quantum ML engineer, neurohaptic and data curation engineer. ‘AI for AI’ roles refer to advanced research scientists & AI engineers who are advancing AI itself by creating the next large language models (LLMs), small language models (SLMs) and other protocols.

“AI is reshaping the global job landscape, and while it is automating routine tasks, it is simultaneously creating new opportunities in areas like data engineering, AI governance, automation strategy, digital operations and human–AI collaboration,” said Dhruv Galgotia, CEO, Galgotias University, Greater Noida.

Rishi Verma, head of AI at global payments technology and transaction processing firm Financial Software and Systems (FSS), said AI may enable humans to focus on more productive work instead of performing routine, mundane tasks.

AI talent mission

To give a push to AI-related education and training, NITI Aayog has pitched for establishment of an AI Talent Mission. The government think-tank has called for a unified strategy to bridge the skill gap in the sector. “A delay or a business-as-usual approach will mean irreversible job losses, a shrinkage in competitiveness, and societal disruption,” it said.

If India is to lead in artificial intelligence, it must build an academic pipeline for advanced research and innovation. Today, that pipeline is dry: most AI degrees are confined to a handful of top-tier institutions, leaving the vast majority of engineering and science colleges without structured AI departments or curricula.

Kewalramani suggested that India must pivot on three fronts: embed AI literacy programmes across schools, colleges and universities; offer working professionals industry-aligned reskilling opportunities that are hands-on and practical; and democratise compute power and AI platforms so young innovators can tinker, prototype and launch new use cases without barriers.

As more tasks can potentially be delegated to agentic technology, co-founder of AI&Beyond Jaspreet Bindra remarked that organisations will have the opportunity to redefine human collaboration, teaming and work.

To bridge the talent gap, companies should provide project-based courses and hands-on training programmes for job seekers to gain relevant AI skills, suggested Bindra. Collaboration between industry and academia can create tailored curricula and provide real-world experience to job seekers.

“India needs to quickly pivot its education model and embrace AI for mass job creation,” said Suhail Nathani, Managing Partner, Economic Laws Practice.

Income guarantee

Job losses due to AI have fuelled the demands for providing support to displaced workers in the form of universal basic income. Leading players behind AI like Tesla chief Elon Musk and OpenAI CEO Sam Altman have called for implementation of universal basic income as a protection to AI-related job losses.

The central government launched the India AI Mission in March 2024 with an objective to position India as a global leader in artificial intelligence. The government has announced Rs 10,300 crore fund over the next five years to strengthen AI capabilities in the country.

A key focus of the mission is the development of a high-end common computing facility equipped with 18,693 Graphics Processing Units (GPUs), making it one of the most extensive AI compute infrastructures globally. This capacity is nearly nine times that of the open-source AI model DeepSeek and about two-thirds of what ChatGPT operates on.

“AI has rapidly become the intelligence backbone of FinTech, and the last three years, accelerated by the rise of generative tools like ChatGPT, have shown how deeply it can reshape service delivery,” said Vineet Tyagi, Global Chief Technology Officer, Biz2X.

In MSME lending, AI now enables lenders to process complex data, anticipate risk shifts and deliver more contextual, personalised credit experiences. This evolution is also driving embedded finance, where credit is offered seamlessly within a business’s existing journey, Tyagi said.

Big investments

Big tech firms and governments are pouring billions of dollars into AI and the infrastructure behind it in a bid to stay ahead of rivals. The global AI market is projected to soar from $189 billion in 2023 to $4.8 trillion by 2033, a 25-fold increase in just a decade, as per a UN Trade and Development (UNCTAD) report.

However, AI’s rapid growth risks widening global divides. Development is highly concentrated, with advanced and large economies benefiting from a deeper talent pool of workers with the necessary skills. In 2022, just 100 companies — mainly in the United States and China — accounted for 40% of global AI research and development (R&D). Combined, the two countries hold 60% of all AI patents and produce a third of global AI publications.

India stands far behind when it comes to the amount of money committed to the development of AI. Under the India AI Mission, the government has committed Rs 10,300 crore ($1.25 billion) funds over the next five years. This seems miniscule when compared with Saudi Arabia’s $100 billion and France’s $117 billion.     

However, global tech companies have announced big investment plans for India. Microsoft earlier this month announced that it will invest $17.5 billion in development of cloud and AI infrastructure in India. Google has pledged $15 billion investment for building a data centre in India while Amazon Web Services has committed $8.3 billion investment.

Sovereign AI model

India aims to develop its indigenous generative artificial intelligence model that can rival OpenAI’s ChatGPT and China’s DeepSeek. According to Electronics and IT Secretary S Krishnan, the home-grown AI model would be ready by February. It is likely to be unveiled during the AI Impact Summit to be held from February 16-20 in New Delhi. Official sources have indicated that the first sovereign AI model would support over 22 Indian languages.

The generative AI could boost India's GDP by $359-438 billion by 2030, representing a 5.9-7.2% increase. Over seven years, the cumulative impact could reach $1.2-1.5 trillion, adding 0.9-1.1% to annual growth, as per a report released by Ernst & Young last year.

The impact will vary across sectors, with business services, finance, transportation, education, retail and healthcare among those expected to benefit the most.