Future-Proofing India’s Workforce: How CSR can mitigate AI-driven job displacement

CSR initiatives play a crucial role in addressing the potential job displacement caused by AI.

By Himanshu Nivsarkar 

Bill Gates once said, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.”

This insight is particularly relevant in the context of Artificial Intelligence (AI) and its impact on the workforce. While AI promises significant economic benefits, including a potential $15.7 trillion contribution to the global economy by 2030 (according to PwC), it also poses challenges such as job displacement. Recent research by Goldman Sachs predicts that generative AI could boost global GDP by 7% and increase productivity by 1.5 percentage points by 2033.

In this rapidly evolving landscape, Corporate Social Responsibility (CSR) initiatives play a crucial role in addressing the potential job displacement caused by AI, ensuring that the workforce is future-proofed and equipped to thrive in an AI-driven economy.

No wonder, 78% of Indian business leaders support AI adoption, seeking higher productivity, efficiency, and new specialist roles (as per a study by the British Standards Institute). However, such widespread adoption will come with significant short-term costs, particularly concerning job security. AI is not just transforming relatively well-paying office jobs; but in combination with robotics, 3D printing and drone tech, it is also set to impact sectors where most people are employed, such as agriculture, construction, and manufacturing. For instance, AI-driven automation in agriculture may lead to the displacement of manual labourers with autonomous tractors and drones for planting and harvesting. In construction, AI-powered robots and 3D printing technologies will reduce the need for human labour in tasks like bricklaying and concrete pouring. Similarly, in manufacturing, AI-enabled machinery and predictive maintenance systems will streamline production processes, potentially reducing the need for assembly line workers. Studies indicate that AI-driven automation could displace around 800 million jobs globally, at a time when more young people are joining the workforce.

Does AI threaten India’s favourable demographic dividend?

India is expected to add over 160 million new workers over the next 20 years, taking its total workforce to over a billion by 2040. At a time when the government is reinforcing flagship initiatives like ‘Make in India’ and launching many sector-specific job creation plans, varying estimates suggest that mass AI adoption may make 60–70% of current jobs redundant within a decade. As against this, the ‘ageing economies’ will benefit from improved productivity through their investments in AI infrastructure, despite the disadvantage of having an older workforce.

Unnerving the delicate social fabric:

Thus, given the steady and progressive impact of AI technologies on jobs in finance, agriculture, construction, manufacturing, healthcare, and services, there is a need to evaluate the ethical implications of such far-reaching displacement on our society. It is feared that there would be mass job losses among skilled workers resulting in greater income inequalities. Until now, every technological advance has led to low-skilled work being replaced with machines/automation. AI is likely to impact both highly skilled as well as low-skill jobs. The labour market can thus become highly polarised between a few high-pay, high-skill and significantly larger low-pay, low-skill jobs, shrinking ‘the middle’ further.

Lack of employment opportunities can severely affect the social fabric, leading to an overall economic decline and rising social insecurities, including poor mental health and wellbeing.
The solution lies in developing new ecosystems and strengthening the existing programmes that train an AI-ready workforce, which can leverage these technologies effectively. At the same time, there may also be a need for policy and regulation that protect the economy from massive shocks.

Govt needs to take the lead to reskill/upskill: The Government of India has identified AI as the enabler for the growth of our digital economy, investments, and job creation. The Economic Survey 2024–25 had expressed optimism that proper skilling would enable the country to stay ahead and turn AI into a force for augmenting employment. Though there is fear of job losses, it has sought robust institutions to ‘minimise the impact of AI on jobs’ in our labour-rich country. Interestingly, it has also pointed at the taxation of profits gained at the expense of labour by greater tech adoption.

At the institutional level, NITI Aayog has launched an initiative, ‘National Strategy for Artificial Intelligence’ (NSAI), to increase AI adoption in key sectors. Programmes like ‘Future Skills PRIME’ target reskilling and upskilling of IT manpower in areas like AI, Blockchain, Robotics, Big Data and Analytics, IoT, and Virtual Reality, while the National Apprenticeship Promotion Scheme, Pradhan Mantri Kaushal Vikas Yojana, Jan Shikshan Sansthan, and Craftsman Training Scheme are being implemented through ITIs to enhance the employability of youth. While these initiatives are welcome, more needs to be done to ensure that new workers are adequately trained for an economy that is disrupted by AI.

Role of corporates in supporting transition: Corporates can create new transitional programmes to provide affordable and accessible education, help in finding new jobs, and provide support services to workers, especially in those sectors that are overwhelmingly experiencing impact. Around the world, a growing number of companies such as Walmart are integrating generative AI technology into their operations for the benefit of employees, while SAP is providing constant training to enable its workforce to deal with the growing automated work environment.

Frame ethical guidelines into corporate policies: On the part of the policymakers, they can strengthen aspects of social security provisions, while corporates must frame ethical guidelines for AI deployment to minimise displacement, including retraining programmes and fostering innovation in emerging industries. As MIT Sloan School research observed, though Generative AI can certainly boost worker productivity, organisations will have to establish a culture of accountability, reward peer training, and encourage role reconfiguration. When AI is applied within ‘the boundary of its capabilities’, it can enhance human productivity by as much as 40% as against those who don’t use it at all.

Redefining CSR plans to counter emerging challenges: Indian corporates can use Corporate Social Responsibility (CSR) to overhaul existing programmes and place necessary resources to transition the workforce. In 2023–2024, Indian corporates spent 18% of their CSR supporting education and 13% each for sustainability and vocational skill development. CSR projects focusing largely on education and skill development can be further refined and remodelled to leverage emerging opportunities in AI. CSR projects can work with educational institutions, ITIs and diploma colleges to support skilling for AI-enabled manufacturing. CSR projects also need to support continuing investment in innovation and incubation so that the pool of companies that can leverage AI increases in the country and supports a larger workforce.

CSR can also support retraining and provide access to AI certification programmes to the existing workforce to take part in new jobs in an AI-driven economy, creating a level playing field.

CSRs may also need to work with the government to design programmes that can ameliorate the impact that a segment of the workforce may face as a consequence of long-term displacement.

(Himanshu Nivsarkar, Head – CSR and ESG, Kotak Mahindra Bank.)

Views are personal, and do not represent the stand of this publication.