Moneycontrol Pro Panorama | The AI Conundrum: Job losses, efficiency gains, and India’s tightrope walk

Indian IT firms are shedding jobs as AI takes over tasks once handled by coders, testers, and customer service agents.

Dear Reader,

First, everyone looked at it with curiosity and excitement. Then, the mood turned to fear—fear of domination over humanity, fear of job losses, and fear of fatal glitches. You know what I’m talking about: the emergence of artificial intelligence in modern society.

Of late, the headlines scream trouble, and they’re not slowing down. From Bengaluru’s tech hubs to Silicon Valley’s sprawl, companies are swinging the layoff axe, and AI is increasingly the blade.

Indian IT firms, the lifeblood of our white-collar workforce, are shedding jobs as AI takes over tasks once handled by coders, testers, and customer service agents. A Jefferies report flags entry-level white-collar roles—software developers, data analysts, call centre staff—as especially vulnerable.

Some of you may recall when not so long ago, Mumbai-based entrepreneur Arindam Paul, founder of Atomberg,

sparked a firestorm on LinkedIn by warning that 40-50 percent of India’s white-collar jobs could vanish, threatening the middle class that drives our consumption economy.

The International Labour Organization estimates 70 percent of India’s jobs face automation risks, with IT and BPO sectors in the line of fire. PhonePe, a fintech heavyweight, reportedly slashed 60 percent of its customer support staff over five years, leaning on AI solutions.

No, this isn’t a sci-fi plot—It’s our reality.

The other side

But there’s another angle, one that doesn’t grab as many clicks.

AI isn’t just a job-eater; it’s a productivity booster. Companies adopting AI are seeing efficiency soar—PwC’s 2025 AI Jobs Barometer notes productivity in AI-exposed industries has nearly quadrupled since 2022.

Indian firms, from banks to e-commerce players, are using AI to crunch data, streamline operations, and serve customers faster. In banking, AI-driven risk modelling is improving predictive accuracy by over 25 percent, per McKinsey. Chatbots handle routine queries, letting human workers focus on complex tasks like dispute resolution.

In manufacturing, AI optimises supply chains, cutting costs and waste. The Economic Survey 2023-24 highlighted AI’s role in transforming healthcare and finance, enhancing services and customer experiences. For India, with its young workforce and patchy infrastructure, these gains are vital to stay globally competitive.

Still, efficiency feels like a cruel consolation when you’re the one out of a job.

Why are we talking about all this?

India’s IT sector, employing 5.4 million, has been a golden ticket, pulling millions into the middle class. Hiring has nosedived—600,000 engineering graduates were hired in 2022, but only 250,000 in 2023, with 2024 projections hitting a 20-year low of 70,000-80,000.

Microsoft, with a major presence in India, axed 6,000 jobs in May 2025, citing AI-driven restructuring, with some LinkedIn roles in Bengaluru reportedly hit. These aren’t isolated cases.

As tools like ChatGPT-4 write code, debug software, and handle queries in minutes, the demand for human labour shrinks. The World Economic Forum projects a net loss of 14 million jobs globally by 2027, and India’s process-heavy white-collar roles are prime targets. The Bank of Baroda warns 20-25 million Indian jobs could disappear by 2030. 

Build skill, and reskill

The rosy counterargument is that AI will create jobs, much like the IT boom did.

Roles like AI trainers, prompt engineers, and cybersecurity experts are popping up. A 2024 IIM Ahmedabad study found 53 percent of white-collar workers believe AI will open new doors.

The question is: Do Indian workers have that kind of skillset?

These jobs require skills most Indian workers lack. NASSCOM says only 17 percent of our workforce has the technical and cognitive skills for AI-era roles. Our education system, churning out engineers for routine coding, isn’t ready for this shift.

Reskilling is a nice buzzword, but it’s slow and costly. And what about the millions who can’t transition to niche roles like AI ethicists? They’re left in the dust in a shrinking job market.

The government’s response has been tepid.

The government admits that reskilling is urgent, but where’s the action? India’s STEM graduates need training programmes that keep pace with AI’s disruption.

To my mind, the problem is the push to integrate AI into industries is encouraging, but it’s urban-focused, sidelining rural India, where agriculture employs millions. Without bold policies, the urban-rural gap will widen, fuelling unemployment, migration, and inequality.

AI’s efficiency—faster data processing, cleaner code, 24/7 customer service—is undeniable, but at what human cost? If India’s middle class crumbles, the “India growth story” risks stalling.

The government must act—fast. Ramp up reskilling, revamp education for AI-relevant skills, and push industries to create jobs, not just cut them. Companies need to invest in people, not just algorithms.

Similarly, workers must adapt, learning new skills, because sticking to old ones is a dead end.

AI isn’t the villain, but ignoring its impact is.

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Dinesh Unnikrishnan Moneycontrol Pro