Artificial intelligence (AI) is poised to reshape the working landscape for millions in India. Recent data indicates that the nation is witnessing an increase in AI-related job creation, outpacing the jobs lost due to the technology. According to a report by Nomura, India recorded 83,100 new hires in AI fields, contrasted with 31,921 job losses connected to AI. This suggests that for every job impacted, approximately 2.6 new AI positions were established.

While these statistics may provide some optimism amid widespread concerns regarding AI’s potential job displacement, they also highlight a more intricate dynamic within India’s workforce. The new roles generated by AI infrastructure do not necessarily align with the positions that are being phased out.

India’s Unique Position as an AI Employment Hub

Economists Sonal Varma and Si Ying Toh from Nomura categorise India as “ground zero” for analysing the ramifications of AI on employment due to the country’s extensive workforce and reliance on technology services and business-process outsourcing. Historically, the availability of a large, educated workforce enabled companies to employ numerous individuals for roles in customer support, data processing, and software testing across the globe.

However, the introduction of AI is transforming the economic viability of several of these functions. The Nomura report notes that many roles resulting in job losses were those in support teams, which are increasingly being substituted by automated chat systems. In contrast, the hiring data reveals a trend where IT graduates are being recruited with a specific focus on AI-related skills.

This creates a situation in which businesses may reduce the number of employees required for standard customer inquiries but simultaneously seek additional specialists with experience in developing and managing AI systems.

Challenges in Workforce Transition

The transition for workers displaced from customer-support roles to AI engineering positions is complex. A worker’s prior experience in customer service does not necessarily equip them with the qualifications or skills required for a role in AI development. Data from Nomura indicates that often, displaced workers are unable to pivot directly into technological roles, obscuring the challenges faced by individuals in the labour market.

Particularly concerning for India is the influx of numerous young individuals entering the workforce each year. Graduates often view their first job as a stepping stone to more advanced positions. If AI leads to a decline in entry-level opportunities, this trajectory may become increasingly challenging.

Companies are likely to favour applicants who possess existing experience with AI or advanced skills, resulting in a two-tier labour market. There is rising demand for workers experienced in both AI and the relevant business process, while entry-level positions are diminishing.

AI Trends Across the Region

India’s situation is reflective of a broader trend within Asia, where Nomura’s analysis highlights 130,758 AI-related positions created against 60,654 job losses. More than 90 per cent of new hires were in technology sectors, while financial services experienced approximately 60 per cent of job reductions. This trend is particularly notable in countries like India, China, and the Philippines, where extensive business-process outsourcing operations are vulnerable to automation.

It is essential to treat Nomura’s findings as a representation of emerging trends rather than a comprehensive analysis of AI’s total impact on employment. The report is based on 69 specific cases, thus offering an indicative rather than exhaustive picture of the labour market landscape.

Despite the complexities, the trend could lead to beneficial outcomes for India. With increased productivity linked to AI, companies may expand their operations and venture into sectors requiring higher expertise. This could generate new opportunities in AI development and operational management, necessitating a focus on ensuring that displaced workers can transition into these evolving roles.

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