India IT Sector Navigating GenAI Transition

India IT sector navigating GenAI transition is the central finding of a new joint study conducted by the Indian Council for Research on International Economic Relations and supported by OpenAI. The report presents firm-level evidence suggesting that generative AI is reshaping work patterns without triggering large-scale job losses.

Titled AI and Jobs: This Time Is No Different, the study surveyed 650 IT firms across 10 cities between November 2025 and January 2026. It analysed hiring trends, occupational demand, productivity outcomes and workforce skilling to assess the real-world impact of GenAI adoption.

The conclusion: AI is reorganising work, raising productivity and altering skill demand rather than causing immediate displacement.

Hiring patterns show moderation, not contraction

The study notes a modest moderation in hiring, concentrated primarily at entry levels. Mid and senior roles remain stable.

Researchers indicate that this slowdown aligns with broader post-pandemic adjustments in the IT sector and cannot be attributed solely to AI adoption.

Interestingly, roles often considered vulnerable to automation, such as software developers and database administrators, are among those experiencing strong demand growth. This suggests GenAI is functioning more as a productivity tool than a replacement for technical expertise.

Ronnie Chatterji, Chief Economist at OpenAI, said the data shows AI complementing human talent and reorganising work structures. He pointed out that only 4 percent of firms have trained more than half their workforce in AI, describing this as a significant opportunity for further capability building.

Productivity gains outpace declines

The report identifies over 1,900 business divisions most affected by AI integration. Among these, productivity gains significantly outnumber declines.

On average, divisions reporting higher output with stable or reduced team sizes outnumber those facing productivity drops by a ratio of 3.5 to 1. Nearly one-third report both increased output and reduced costs.

This suggests firms are scaling operations more efficiently without parallel reductions in employment.

The findings reinforce the view that AI is amplifying output rather than replacing workers at scale.

Demand shifts toward hybrid skills

AI adoption is reshaping hiring priorities. According to the study, 63 percent of firms report increased demand for candidates who combine domain expertise with AI or data skills.

The emphasis is moving toward hybrid skill sets integrated into core workflows.

This shift signals structural change. The premium is no longer on isolated technical knowledge but on the ability to apply AI within business contexts.

Upskilling efforts remain uneven

More than half of surveyed firms are already supporting AI adoption through awareness or training initiatives. An additional 38 percent plan to introduce such measures.

However, training penetration remains limited. Only a small proportion of firms report that more than half their workforce has received AI-related training in the past year.

Key barriers include:

• Difficulty finding qualified trainers

• High implementation costs

• Uncertain returns on investment

• Ethical and legal concerns

• Organisational readiness challenges

Shekhar Aiyar, Director and Chief Executive at ICRIER, said the study brings evidence to a debate often dominated by opinion. He noted that while India’s IT sector appears to be managing AI adoption relatively well, many firms remain underprepared for future transitions.

Outlook: Net job growth likely

The report concludes that rising global demand for AI-enabled goods and services could support net job creation in India’s IT sector over the medium to long term.

Roles and skill requirements will continue to evolve. But the direction, according to the data, points toward adaptation rather than contraction.

Taken together, the findings indicate that India IT sector navigating GenAI transition is less about disruption and more about structural adjustment. AI appears to be reinforcing productivity and shifting skill requirements while preserving overall employment stability.

The transition is underway. The scale of preparedness, however, will determine how smoothly it unfolds.

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