AI Shifts India's Job Market

Artificial intelligence (AI) is generating more jobs than it is eliminating in India, according to a Nomura report cited by The Economic Times and Livemint. However, the benefits are not evenly distributed. The biggest impact is being felt at the entry level, where companies are cutting back on fresher recruitment even as demand for experienced professionals grows.

Nomura's report, Beyond the Headlines: AI Has Added Jobs in Asia – So Far, examined 69 company announcements across Asia, mostly between 2022 and August 2026. It found that companies announced around 131,000 AI-related jobs, compared to about 61,000 job losses linked to AI. India, China, and the Philippines have recorded net increases in AI-related employment.

Yet, as The Economic Times and Livemint report, the positions being created are not necessarily the ones being lost. This discrepancy presents a challenge for young workers and fresh graduates, with The Economic Times describing India as "ground zero" for AI-driven disruption in Asia's labor market.

Entry-Level Hiring Declines Sharply

The report describes an emerging "K-shaped" labor market, where opportunities diverge between junior and experienced workers. Companies are increasingly seeking senior employees with industry knowledge and management skills while reducing reliance on entry-level staff.

Data from a survey of 651 IT firms by the Indian Council for Research on International Economic Relations, reported by both outlets, shows that 55% of companies reported a decline in entry-level hiring, while only 14% reported a decline in recruitment for senior-level roles.

A similar pattern is visible in South Korea, as reported by both The Economic Times and Livemint, drawing on Bank of Korea research. Youth employment among people aged 15-29 fell by 211,000, with almost the entire decline concentrated in industries with high AI exposure. During the same period, employment among workers in their 50s rose by 209,000, with more than two-thirds of the increase coming from similarly exposed industries.

India's IT sector reflects this trend. Staffing firm Xpheno estimates that net IT-sector hiring in India fell from around 600,000 in FY22 to 140,000 in FY26, with much of the reduction coming from fewer campus placements and slower recruitment rather than mass layoffs. Nomura refers to this pattern as "silent firing" because companies adjust by hiring fewer people rather than letting go of existing staff.

Where Job Losses and Gains Concentrate

According to Nomura's analysis, financial services accounted for about 58% of recorded AI-related job losses, with technology contributing another 30%. The report notes that AI allows banks to expand their operations while keeping their workforce relatively small.

Positions most exposed to AI-related job losses include reconciliation, compliance, and data-entry roles in banking, customer service jobs handled by chatbots, and junior tech roles such as software assurance testing and entry-level codes. In contrast, manufacturing, construction, direct healthcare, and education remain harder to automate because their tasks require physical involvement or complex human interactions.

The jobs AI is creating are heavily concentrated in technology. More than 90% of AI-related jobs identified by Nomura are in tech, with less than 10% in other sectors. India has seen new employment in areas such as data annotation, linguistics, and AI-focused IT services. China has also seen stronger demand for skilled graduates involved in developing proprietary AI models. Some roles outside pure tech include AI risk analysts in banks and specialists working on autonomous vehicles.

India's Position and Future Outlook

India's IT services and business-process outsourcing industries were built around functions that are increasingly performable by AI systems. According to the Economic Times and Livemint, this makes some of the country's traditional back-office and entry-level roles vulnerable, but it also has a large pool of engineers and tech professionals who could benefit from greater demand for AI skills.

Nomura expects AI-related employment to spread into more industries as adoption increases, but current data does not yet show a significant expansion beyond tech. Its conclusion, for now, is that AI has been a net positive for jobs in India, but it cautions that current numbers may not provide a clear picture of what lies ahead. The report notes the shift from simple process automation toward more capable agentic systems, which could further reshape labor markets.

For fresh graduates, the question is whether AI will take away the first rung of the career ladder. Both The Economic Times and Livemint note that net positive numbers are not necessarily comforting for those at the entry level, where the break is already visible.

Perspectives

  • Nomura Research: Nomura's report concludes that AI has so far been a net positive for employment in India and Asia, but the numbers do not capture the full picture. The firm notes a concentration of AI-related job creation, and cautions that the current data may not reflect future trends.
  • Indian IT firms (based on survey): The survey and analysis suggests a shift in recruitment practices, with firms reducing entry-level hiring while continuing to value experienced staff, reflecting changes in demand for new tools.
  • Bank of Korea research: Data from South Korea shows a significant decline in youth employment in AI-exposed industries coupled with a rise in employment for older workers, indicating a demographic divide in the impact of AI adoption.
  • Xpheno (staffing firm): Xpheno's estimates for the Indian IT sector point to a marked fall in net hiring, primarily due to reduced campus recruitment and slower growth, rather than a broader or widespread layoffs.