This report is from this week’s CNBC Inside India newsletter, delivering timely and insightful news and market commentary on emerging powers. Subscribe here.
The millions of technicians and engineers who have built India’s multi-billion dollar IT services industry have a new teammate: artificial intelligence. And accepting this partnership is no longer optional. Resistance could mean the end of your career.
Tata Consultancy Services, India’s largest IT company, told analysts on an earnings call on Monday that it aims to achieve “AI fluency at scale” and now has 217,000 employees with “high-order AI skills,” up from 180,000 just a month ago.
TCS is training all its employees on working with AI. The world’s second-largest IT services company told analysts last month that it was particularly keen on hiring “AI natives.” He is a young man who is proficient in using a wide range of cutting-edge AI tools, mainly in his work.
“These people (trainees) really know how to treat AI as teammates,” Aarti Subramanian, TCS executive director and chief operating officer, told analysts at the company’s annual general meeting on Dec. 17.
White collar is having a meeting with artificial intelligence.
Guoya | Digital Vision Vector | Getty Images
It turns out that the company is not the only major Indian company focusing on collaboration between humans and AI.
More than a third of India’s IT companies use artificial intelligence for 40% of their core operations, according to a report by India’s National Association of Software and Services Companies (Nasscom) and job search platform Indeed.
On average, companies see 25% to 35% improvements across important key performance indicators as a direct result of using AI, according to the report.
The report, based on a survey of 120 HR executives at IT companies, said nearly all (97%) expect their work to be performed by teams comprised of humans and AI by 2027. Pairing can occur between a human and an AI tool or agent.
Sashi Kumar, managing director at Indeed India, and Ketaki Karnik, head of research at Nasscom, told CNBC that AI will play a leading role in most of these teams, except for a few roles that require human judgment, empathy, and a hands-on presence.
skill challenge
As AI technology evolves rapidly, a key question is whether employees can upskill quickly in response to job demands.
“AI has become one of the most important skill sets for new entrants to IT services companies in India,” said Sachin Arg, chief executive officer of NLB Services, a global IT staffing firm.
Almost a quarter of all new jobs now require AI or data-related skills, up from just 5%-10% three years ago, Arg said, adding that AI skills in India requires urgent attention as the talent gap is widening rapidly as the demand for AI-enabled talent increases.
“The supply of AI talent in India is currently 50% of current demand and is expected to lag further in the coming years,” Niti Aayog, a government policy think tank, said in an October report.
Niti Aayog said that in a business-as-usual scenario, “headcount in the technology services sector could decline from 7.5-8 million in 2023 to 6 million by 2031,” but if corrective measures are taken and AI skills are boosted, the number of jobs in the IT sector could rise to 10 million.
According to data shared by TCS on Monday, the company had 582,163 employees at the end of December, down from 607,979 at the end of March last year. In July 2025, the company announced that it would lay off primarily middle and senior managers due to a “skills mismatch” due to the growing importance of AI.
Ravi Menon, IT services analyst at Macquarie Capital, said companies such as TCS are still hiring and layoffs are largely due to skills mismatch.
He expects net IT employment to be only 1-1.5% of the existing workforce this fiscal year, but rising to 6-7% in the fiscal year ending March 2027 and 7-9% next year as demand increases, with AI adoption across the enterprise being a key driver.
But not everyone agrees with that assessment.
Saurabh Mukerja, founder and chief investment officer of Marcellus Investment Managers, told CNBC’s “Inside India” earlier this month that “the number of people needed to work in IT services in an AI world will be orders of magnitude lower than they are today.”
Mukherja said IT services, which had been India’s biggest job creator in recent years, was shedding jobs “quite rapidly.”
The future of the IT workforce appears uncertain, but as companies increasingly adopt new technologies, non-human partners will also thrive. The best move for IT professionals may be to upskill and team up with AI.
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Goldman Sachs’ Arnab Mitra said India’s revenue cycle will begin to “revive” in 2026, driving rotation into the consumer sector.
Sumedha Dasgupta, senior analyst at the Economist Intelligence Unit, said she expects a US-India trade deal to be finalized within the first half of this year.
The chief executive officer of UTI International said a key challenge for the Indian government is to find ways to create jobs amid layoffs due to the growing use of AI in high-tech sectors.
need to know
India’s consumer inflation rate rose to 1.33% in December. Inflation confirmed its upward trajectory, rising for the second consecutive month after hitting a record low of 0.25% in October. The rise in inflation was mainly due to increases in prices of vegetables, meat, fish, eggs, spices, pulses and manufactured goods.
Infosys raises expectations. Infosys, one of India’s largest IT services companies, has reportedly raised its revenue growth outlook for fiscal 2026 to 3% to 3.5% on a constant currency basis, up from its previous forecast of 2% to 3%.
Quote of the week
Our understanding is that foreign investors are on the brink of waiting for earnings to pick up in India, and we believe that earnings should be in the mid-teens by the next two quarters and the April earnings season, which should trigger foreign investors to come back.
— Praveen Jagwani, CEO of UTI International
at the market
Indian markets were closed on Thursday.
The Nifty 50 index is down 1.77% year-to-date but is up over 10% in 2025. The benchmark 10-year Indian government bond yield remained at 6.649%.
JPMorgan views India’s long-term investment story as firmly intact, supported by a growing middle-income population, rising consumer demand, and a relatively stable government with consistent policy priorities that support both urban and rural communities.
“I think the question now is how high the valuations are and whether they’re ready for a correction if earnings don’t actually pick up,” said Raisa Rashid, global market strategist at the bank.
very soon
January 19th-23rd: World Economic Forum, Davos
January 20: Shadowfax Technologies IPO begins
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