AI and the vanishing first job: India’s emerging mobility challenge
The conversation around Artificial Intelligence (AI) often defaults to a narrative of mass job loss, but emerging evidence suggests a more nuanced shift. McKinsey research (2023, 2025) estimates that around 30 per cent of current work activities in the US, primarily within white-collar sectors, could be automated by 2030. Analysis by Anthropic (2026) and Stanford University (Brynjolfsson, Chandar and Chen; 2025) found that while AI-exposed occupations, such as computer programmers and customer service representatives, have not yet experienced significant rises in unemployment, hiring for younger workers in these roles has slowed measurably. This signals an important shift: firms are not eliminating jobs at scale, but they are reducing hiring at entry level. The layoffs may not come, but the offer letters may come more slowly.
The jobs are safe, the ladder is not
At first glance, India appears relatively insulated. Forty-three per cent of the workforce remains in agriculture, with large shares in construction (12 per cent), retail and transport (18 per cent)-sectors where physical presence and human judgement remain indispensable (PLFS, 2025). AI will not pour concrete, repair a power line or manage a kirana counter anytime soon.
But India’s growth story has not been driven by these sectors alone. It has been powered by the steady expansion of formal services: IT-BPM, customer support, finance operations, analytics and the growing ecosystem of Global Capability Centres (GCCs). These sectors have historically functioned as engines of aspirational mobility, absorbing educated youth into formal employment. Yet these are precisely the domains where AI is now performing core tasks: writing code, handling customer interactions, processing data and managing workflows. The risk, therefore, is not where India is today, but where it is trying to go.
The most consequential shift is unfolding at the bottom of the pyramid. Entry-level roles in IT services, BPMs and analytics have traditionally operated as training pipelines. Firms hired fresh graduates with low initial productivity, invested in structured training, and scaled them into higher-value roles over time. AI is compressing this model. With AI assistants enabling developers to work faster and autonomous agents resolving most routine customer interactions, firms now require fewer entry-level workers to produce the same output. The result is not mass layoffs, but a structural decline in fresher hiring. In a country where 8-10 million individuals enter the workforce annually (World Bank, ILO), this is a systemic challenge.
Why this matters more for India
India’s youth labour market was already fragile before the AI transition. The graduate unemployment rate of 11.2 per cent is more than three times the overall unemployment rate of 3.1 per cent (PLFS, 2025). More than 45 per cent of employed graduates are overqualified for their roles (CMIE, India Skills Report 2025). Entry-level wages in IT-BPM have stagnated for over a decade, with starting salaries in the `3.5-4.5 lakh per annum range (TeamLease, 2024-25). AI risks amplifying all three trends: fewer formal-sector entry points, higher skill thresholds for hiring, and slower and more unequal wage progression. The first job is more than employment; it is an economic bridge. It shapes income trajectories, household aspirations and urban mobility. When that bridge narrows, the effects ripple across the economy. This is not a conventional jobs crisis; it is a mobility crisis.
A familiar technological moment
The advent of AI today is comparable to the arrival of computers in the late 20th century. Computers did not eliminate work; they transformed it. Every sector, every business and every activity became computer-powered. Productivity surged, new industries emerged, and those who adapted gained disproportionately. India seized that moment. Tech services companies, in particular, helped position India as a global IT powerhouse. That wave created millions of jobs and gave India a competitive advantage in the global economy.
AI presents a similar inflection point, creating opportunities for India’s next generation of technology leaders to build for the world. But while AI opens new frontiers, it is also narrowing the entry ramp. For policymakers, the priority should be to incentivise entry-level hiring through apprenticeship-style schemes, tax credits or wage subsidies for firms hiring fresh graduates, while expanding the National Apprenticeship Promotion Scheme (NAPS) into white-collar sectors as part of a national “first job” guarantee.
Skilling policy must shift from degrees to task-level capability, moving beyond generic coding or AI literacy towards skills that complement AI (for example, problem framing, client management and domain expertise). Job creation must be accelerated in less AI-exposed, labour-intensive sectors such as healthcare, tourism, logistics and the green economy to absorb surplus educated labour. Finally, India needs a real-time labour market observatory that tracks hiring trends, wage movements and occupational demand. In addition to macroeconomic indicators such as the PLFS, high-frequency labour market intelligence is required. For businesses, the imperative is adaptation, not contraction. Firms should redesign entry-level roles by breaking jobs into AI-assisted and human-critical components while retaining structured junior positions focused on judgement, coordination and client-facing tasks. This must be accompanied by institutionalising “AI + human” workflows, where employees are trained not just to use AI tools but also to supervise, validate and integrate them.
AI productivity gains must also be measured responsibly, avoiding their use purely as a cost-cutting lever and instead tracking whether adoption is strengthening or eroding organisational capabilities. Finally, deeper partnerships with academia are essential, including co-designing curricula, offering live projects and enabling early exposure to AI-integrated industry workflows.
AI is not eliminating work yet, but it is reshaping who gets access to it. The evidence from advanced economies offers India a narrow but valuable window. This disruption is not sudden; it is gradual, and it begins at the bottom of the ladder. By getting ahead of this curve through proactive policy, business adaptation and bold entrepreneurship, India can ensure AI augments its demographic dividend rather than renders it obsolete. The lesson from the IT revolution is clear: technological shifts reward early movers. This is the moment for the new-age Narayana Murthys to build the next generation of AI enterprises that serve the world while creating new career pathways for millions of job seekers.
The writer is Executive Director, Pahle India Foundation. The article includes inputs from Kuntala Karkun, Senior Visiting Fellow, Pahle India Foundation; Views presented are personal.
