The Chief Economic Advisor said that the impact of Artificial Intelligence should not be over emphasised, even as it was set to reshape hiring patterns and competitive dynamics in the industry.
Placing the issue in perspective, he said that India needed to create about eight million jobs every year. The IT sector employed 5 to 6 million people in total. This meant that even a meaningful AI-led disruption within IT would not define the country’s overall employment challenge, he said.
Estimates of AI’s impact on IT jobs varied with projections suggesting a 10 to 20 per cent effect over five years. However, the net outcomes remained uncertain depending on how many new roles were created alongside displacement, he said.
Nageswaran indicated that the current phase should not be seen as a transition moment for the IT industry. He raised a key question on whether the Indian IT industry has created products over the last three decades that make it indispensable globally, suggesting that AI could accelerate the need to move beyond services into higher-value innovation.
At the same time, he pointed to structural buffers within the sectors. The growth of global capability centres, where a significant share of high-value work is undertaken in India, provides some insulation against immediate disruption.
However, he cautioned against viewing AI through a narrow IT lens. “The real employment story lies in creating AI-insulated jobs,” he said. The larger challenge was to generate work in sectors where automation had limited reach, he added.
These include trade-orientated roles and services that depend on human presence, judgement and interaction. While AI may compress certain categories of IT-enabled services, it also shifts the broader labour market conversation towards skills that cannot be easily automated.
He also called for a rethink of education in the AI era. Rather than focusing on early exposure to AI tools, the emphasis should be on foundational capabilities such as reading, writing and critical thinking. In an AI-driven environment, the quality of outcomes depended on the ability to ask the right questions, Nageswaran said.
The overall takeaway was that while AI will influence the trajectory of India’s IT industry, it is not the central risk to employment. The larger task lies in adapting to technological change while expanding opportunities beyond the IT sector.