Worried about AI jobs paradox?

Recently, the Indian prime minister, Narendra Modi, gave a completely counterintuitive narrative to the jobs-related debates about artificial intelligence (AI). “Loss of jobs is AI’s most feared disruption, but history has shown that work does not disappear due to technology, only its nature changes.” The Parliament’s standing committee on IT took the same discussion forward in its recent report. It categorically stated, “The advent of AI is not leading to any job losses, instead it is being used as a tool for augmenting capability.” Hence, it is an opportunity rather than a threat, one which needs strategic interventions.

According to the estimates made by the IT ministry, “The potential of AI in India fundamentally is… that there could be about 47 lakh new jobs which can be created by 2027….” To put this figure in perspective, it is less than 15 per cent lower than 54 lakh people employed by the IT and software sector today. “So, almost on par with that (IT), there is potential in AI to create jobs,” the ministry told the Committee. In fact, at present, the AI talent pool is just above a million people compared to a projected demand of over two million, or 50 per cent gap.

Contrast this optimism with other shocking global reports. The International Monetary Fund estimates that 40 per cent of the global jobs are exposed to AI. Goldman Sachs estimates that approximately 300 million full-time job equivalents globally may be affected by generative AI. Dario Amodei, CEO, Anthropic, which owns Claude AI tool, feels that AI can eliminate up to 50 per cent of entry-level white-collar jobs within five years, with unemployment levels of 10-20 per cent. Mustafa Suleyman, Microsoft’s AI chief, says that most professional work will be replaced within a year to 18 months.

In a more technical jargon, according to Goldman Sachs, “each 1-percentage point productivity gain from technology raises unemployment by approximately 0.3 percentage points in the short run." On the positive, it states that negative impact fades away within two years. In the same vein, the World Economic Forum estimates that while AI can create 170 million jobs globally, it will displace 92 million by 2030, which implies a net gain of 78 million. This mirrors the sentiments among the Indian policy-makers, who think that AI will prove to be a net surplus in terms of new jobs, and those lost.

Ironically as it may seem, the IT ministry told the parliamentary committee that 38 million jobs will be transformed by 2030. One way to gauge this paradox, and reconcile it is that jobs will not disappear, but their nature will change dramatically, which can be easily addressed by new skills, and reskilling old ones. The confusion possibly stems from three different aspects of AI. One of them includes new jobs in AI as a sector, as its adoption grows. This is akin to what happened in IT and software when new kinds of jobs came into existence.

In addition, some of the old jobs will incorporate AI tools, which means that the employees will need new skills to retain their jobs. If they do, they will survive. If they do not, they will be replaced. A churn will happen as new skills become paramount. This may be addressed by learning new skills, and reskilling. The third element includes jobs that will most likely disappear, and be replaced by tech. It will not be a zero-sum game. Either it will lead to positive-sum, or net creation of jobs, like what the WEF and Indian policy-makers think, or it may be a negative-sum one, as pointed out by the other estimates.

In the first layer too, AI may add nearly five million jobs (47 lakh, as estimated), but this will decimate the software and IT sector. A large part of the latter’s more than five million jobs may be replaced by AI-skilled workers. The adjustment is visible in the hiring data. In the first nine months of 2025-26, India’s five largest IT firms, TCS, Infosys, HCLTech, Wipro, and Tech Mahindra, added a combined total of 17 employees. Yes, just 17 employees, if one includes the hirings and layoffs. In the same period the previous year, their net addition was 17,764 jobs.

At present, the hirings and layoffs relate to AI. The latter include redundant, or displaced jobs. The former may be in line with requisite AI skills. Layoffs are up, and hirings are down. In Q2-26, the six largest IT firms added less than 4,000 jobs, or a more than 70 per cent decline from the previous quarter. Entry-level hirings, according to TeamLease Digital, is 50 per cent below the pre-pandemic levels. The India Skills Report 2025 shows that the intent to hire freshers or newcomers is down from nearly 19 per cent in 2024 to 14 per cent in 2025.

“With cost optimisation being the key driver, clients are asking for productivity benefits. This requires IT firms to do more work with the same number of employees, or the same work with fewer.” says Akshat Agarwal, a Jefferies analyst. AI-led productivity allows the firms to deliver equal or higher output with fewer employees. India’s large IT firms employ more than 4,30,000 professionals with 13-25 years of experience, described by staffing firm, Xpheno, as the “big fat middle layer.” Compression of routine work due to AI increases pressures on mid-layer roles. Their jobs and salaries face threats.

The parliamentary report identifies data entry, ticketing, and standard query handling as functions being automated or augmented. These categories historically absorbed large volumes of fresh graduates. In addition, as outcomes and results become more important for clients, rather than manpower employed, mid-level or the fat middle-layer, will face unique problems and stress. Entry-level roles require retraining to operate AI tools. High-skill roles require deeper expertise, longer training cycles, and significantly lower supply.

At present, the AI-related risks appear low because of the state of Indian industry. According to a survey by ICRIER of 650 IT firms, generative AI is not yet causing widespread layoffs in the IT sector. This is because only four per cent of the firms had trained more than half their workforce in AI. The IT ministry contends that only 16 per cent of the software professionals are currently AI-skilled. If the trend is not accelerated, the jobs market will be in turmoil. Imparting new skills, or reskilling is not an easy task. Nor is any transition.