Entry-level tech demand slumps 20-25% as India shifts to diamond-shaped workforce: EY

As AI takes over this foundational work, companies are redesigning workflows around hybrid human–AI pods rather than hierarchical teams. (Representative image)

India’s technology workforce is undergoing a structural reset as Generative AI (Gen AI) adoption gains traction, reshaping hiring patterns and flattening the bottom of the traditional talent pyramid.

According to EY’s AIdea Outlook 2026 report, enterprises are now moving toward a diamond-shaped workforce, where mid-level and specialist roles expand while entry-level hiring contracts sharply.

Industry observers cited in EY's report point out that several Indian IT services firms have already consolidated around 20-25 percent of entry-level roles through intelligent automation and AI augmentation.

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AI displaces routine, outsourced work first

The report says that AI is selectively displacing outsourced and standardised functions such as administrative operations, customer service, tele-calling, back-office processes, and other repetitive tasks.

About 64 percent of companies surveyed indicated that displacement is concentrated in these routine and previously outsourced activities.

As much of this work historically relied on large fresher intakes, junior hiring is among the first to feel the impact.

IT firms consolidate entry-level roles

Leading companies have slowed fresher onboarding and increased mid-career hiring for hybrid roles such as AI validation, orchestration, and domain-heavy oversight.

In one example by EY, a major IT firm reduced entry-level hiring by nearly 30 percent while increasing mid-career hiring by 20 percent.

This reflects a broader move toward a diamond structure that is leaner at the base but wider in the middle.

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Hybrid human-AI pods replace traditional structures

This transition is being driven by the rise of AI agents and copilots that now execute routine, multi-step tasks that junior employees once handled.

EY’s analysis of about 10,000 tasks showed that 24 percent can be fully automated and another 42 percent significantly optimised. Thereby, freeing up 8 to 10 hours per employee each week.

As AI takes over this foundational work, companies are redesigning workflows around hybrid human–AI pods rather than hierarchical teams.

Managers warn of a missing apprentice layer

The report also highlights concerns about the future of early-career talent.

With AI increasingly handling grunt work, managers worry about the disappearance of the apprentice layer that traditionally built domain judgment and expertise.

While routine tasks fade, companies are prioritising human roles centred on creativity, decision-making, and complex problem-solving, while AI handles execution.

Mid-career hiring rises

Even as entry-level roles shrink, firms are aggressively expanding mid-career hiring in areas such as AI validation, governance, integration, and orchestration.

These hybrid positions require a mix of domain depth and technical understanding. and the ability to supervise AI systems that operate continuously.

Also, read: Mid-level hiring outpaces fresher intake in IT, GCCs as firms seek experienced hands

Overall layoffs remain limited

Despite the displacement in junior roles, EY says that the overall employment impact remains measured.

Only a small fraction of surveyed organisations reported major layoffs.

Most companies are redirecting spend from outsourced tasks toward internal automation and capability-building, which is reshaping but not collapsing overall headcount structures.

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De-hyphenated: Revenue growth & headcount

The rise of the diamond-shaped workforce marks a fundamental shift in India’s technology employment model, decoupling revenue growth from linear headcount expansion.

As AI becomes embedded across operations, companies are rethinking role architectures, career paths, and workforce design.

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EY says the next phase of adoption will depend on how effectively enterprises balance automation with human judgment and redesign career pathways to maintain leadership depth.

The report makes clear that the future tech organisation will rely more on mid-senior hybrid talent than on bulk fresher hiring.