India’s latest Economic Survey delivers one of its starkest warnings yet: A rapid, AI driven productivity shock—interacting with historically high global debt levels—could trigger an economic disruption. Reports suggest it could potentially be worse than the 2008 global financial crisis.
The Survey identifies a “sharp structural break after December 2022” in how generative AI is reshaping labour markets. White collar workers in IT services, BPM, finance, analytics and professional services are central to urban consumption. They also help absorb the millions of graduates entering the workforce each year.
Unlike earlier technology shifts that mainly disrupted manufacturing or informal work, today’s AI wave goes after cognitive and process driven roles—the very jobs that anchor the middle class.
“In the near term, a lot of this is productivity led rationalisation—which means fewer hires, flatter teams, and higher output expectations using AI. But there’s also a structural element,” says Shantanu Rooj, founder and CEO of TeamLease Edtech. “Once workflows are rebuilt around AI, some entry level and coordination heavy tasks don’t come back in the same form.”
Global trends echo this shift. The World Economic Forum notes that many employers expect workforce reductions in areas where AI can automate routine tasks, even as they step up hiring for AI related skills. Meanwhile, TeamLease estimates that India could face a 53 percent shortfall in AI ready talent relative to demand—a gap that could further widen as companies accelerate AI adoption.
The Economic Survey points out that, after December 2022, output in highly digitised sectors continued to grow even as hiring flattened, breaking the long standing pattern where more business activity meant more white collar jobs.
In an environment shaped by softer global demand and higher capital costs, we are seeing a rapid evolution from generative AI to agentic AI. “While GenAI focussed on content and assistance, agentic AI represents a move towards goal-oriented autonomy. Organisations are now actively seeking professionals who can build and manage these autonomous systems—agents that don’t just suggest actions but execute complex, multi-step workflows to solve real-world business problems,” says Anshumaan Prasad, business head, NIIT Digital and head of marketing, NIIT Limited.
Insights from the World Economic Forum’s Future of Jobs Report reinforce this transition. While automation is reducing the need for routine tasks, it is simultaneously accelerating demand for higher-order capabilities like systems thinking and AI orchestration. “In this sense, AI is not eliminating white-collar jobs but reshaping them into 'super-roles' where humans act as the strategic orchestrators of an autonomous digital workforce,” adds Prasad.
Staffing firms are seeing this transition play out in real time. “The pressure on the ground now is about the extended runways and waiting time for visible ROI on AI investments made on enterprise AI,” says Kamal Karanth, co founder of specialist staffing firm Xpheno. “Indian enterprises that committed to AI based restructuring and optimising talent plans and costs are in a catch 22 situation—with rising manpower costs despite lowered hiring and mounting margin pressures.”
He points out that the sector’s manpower cost to revenue ratio—a key measure of cost efficiency—has stayed stagnant at Rs 1.8 to 1.9 of revenue per rupee of compensation cost for nearly five years. This, he adds, has remained unchanged despite AI interventions, reorganised teams, reduced bench strength, and lower fresher intake. “The sector remains as linear as it always was,” he says, explaining that revenue is still tightly coupled with increases in manpower spend. “The real impact will be visible only when these ratios start moving beyond the current range.”
This tightening is visible in hiring patterns as well. “A larger share of hiring is now for specific, niche skills—not volume hiring with training post joining,” says Neeti Sharma, CEO, TeamLease Digital. Approvals are slower, job definitions sharper, and companies prefer experienced, skills ready talent over freshers. According to Sharma, “Any repetitive, routine, logical work can be done by AI agents—and we’re seeing this across industries.”
The impact is starkest in BPM (business process management), the traditional entry point for millions of young workers. Voice based roles have fallen to roughly a quarter of total openings, she notes. Meanwhile, demand is rising for digital, analytics and automation roles, pushing companies towards smaller teams, higher skill density, and hybrid roles focused on orchestration rather than execution.
Jain adds that output expansion is still the aspiration, but typically comes only after companies fix foundational gaps: Clean data, model governance, controls and new operating models. Until then, the sequence he’s seeing is: “Take friction out first”, then redeploy freed up capacity into new products, faster releases, deeper client engagement and better customer experience.
According to Randstad, these gains don’t automatically translate into reduced hiring. “You can deliver more solutions. Earlier, to do more work, you needed more people. Now, with fewer but skilled people, you can scale. This is an opportunity for Indian companies to grow bigger and compete at the global level, not to cut employees,” says Anand V, CIO APAC, Randstad.
The World Economic Forum, in January, estimated AI could contribute up to 14 percent of global GDP by 2030, equivalent to about $15.7 trillion.
However, many of these gains remain gradual and fragmented. “The real challenge is not whether AI works—it clearly does—but how organisations convert localised efficiency into systemic value. Without redesigning roles, workflows, and delivery models, productivity gains stay invisible on the P&L,” Sharma of EY India adds.
For workers, the reskilling mandate is equally urgent. The Indian white collar workforce needs to develop the right AI capabilities—starting with AI literacy that helps them use AI tools more productively. Beyond that, they need the ability to evaluate AI-generated outputs critically. As Arindam Mukherjee, co founder and CEO, NextLeap, says: “Workers need interpretation and judgment skills that allow them to critique AI outputs and not merely be satisfied by generating the outputs, along with a continuous learning mindset so that they can keep pace with the advancements in the world of AI and adapt faster.”
However, preparing India’s workforce cannot rest on individuals or companies alone. Industry bodies will need to build shared standards for AI governance, workforce capability frameworks and ethical adoption, helping companies move from isolated pilots to enterprise wide best practices. The public sector’s role is equally important. “Governments and academia have a critical role in modernising education systems, accelerating largescale reskilling, and creating mobility pathways between declining and emerging roles, while strengthening social safety nets for workforce transitions,” says Sharma of EY India.
For professionals, the message is unambiguous: “the ability to collaborate with and govern agentic systems is no longer a 'future' skill—it is the baseline for competitiveness in 2026,” says Prasad. Whether this moment becomes a short term adjustment or a long lasting shift will hinge on how quickly India can reskill its workforce.
But sustaining this advantage will require India to rethink how it grows its services economy. As Neeti Sharma, CEO, TeamLease Digital, says: “Services contribute close to 55 percent of India’s GDP but employ only around 30 percent of the workforce, showing that productivity is rising faster than employment. The next phase of growth will come from high-value roles in product engineering, data platforms, AI governance and industry-specific digital services driven largely by GCCs and managed capability models rather than traditional IT staffing.”
Even the displacement risk is relatively smaller in India. Only about 6.4 percent of the workforce is substitutable by AI, as per global benchmarks—far below the 15 percent estimated for other emerging markets. This gives India a real strategic cushion in the AI transition. “Of all the emerging markets, it is among the most prepared. Oxford Insights has this government AI readiness index where India is well above the average for emerging markets, it’s almost at advanced economy level. So, it has put in place the infrastructure, both regulatory and physical, and then there’s the focus on skilling. All of this puts India at an advantage,” Ohnsorge adds.
First Published: Feb 11, 2026, 12:11
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