No more blues! GenAI will create new jobs in Indian IT industry

Major IT services companies like Tata Consultancy Services, Infosys and Wipro showed a fall in their headcount for FY24, marking the first time in over 20 years that their employee base had shrunk. These firms witnessed a combined reduction of around 64,000 employees for FY24. For the quarter ended March, the fall was around 13,000. According to management commentary, slow ramp up of projects, more number of people on the bench and a tough demand environment are prompting them to reduce their headcount. Moreover, they are now focussed on improving employee utilisation levels in order to improve productivity.

While TCS has started fresher hiring through campus placement, the other two top remain non-committal about hiring freshers in FY25. Most importantly, all these companies have given no concrete response on how generative AI is changing the hiring landscape. During analyst calls, some company officials said that Gen AI is helping them to automate processes, thus, reducing the need for human interface. So, without spelling out the impact of GenAI on employee count, the companies are saying that it is making inroads into the hiring landscape.

However, all three agreed that GenAI will not impact the employee numbers in the near-term though it is difficult to gauge its impact in the medium-term given the nascent nature of this technology. Against the backdrop of the ongoing debate on GenAI and its impact on IT firms, it can be safely assumed that this novel technology is slowly penetrating into the hiring landscape. Some experts opined that currently the productivity gain from GenAI adoption is around 8-10 per cent, which is likely to increase to 25-30 per cent in the coming years.

This productivity gain will come through automation, which will replace people. So, the relationship between revenue growth and employee count will diverge further over the years, although HR experts are not sure about how this will pan out. While some see it as a phenomenon of machine replacing man, others consider it as yet another technological breakthrough that will actually create new jobs. The dominating argument is that GenAI will replace jobs at the lower end but will create more number of job roles pertaining to the higher skillset.

Though how GenAI will impact hiring is anybody’s guess, past technology cycles show that the technology industry has added more hands to its existing employee base than shedding staffers following the advent of any new technology. This happened from the dot com bust days to fast adoption of cloud computing. Therefore, any fears about job losses in the IT industry should be carefully calibrated.

Each and every technological breakthrough reduces workload for some and creates work for others. And GenAI may not be an exception to this trend. It is likely to create more skilled engineers at the higher end. On that count, the country’s IT industry’s focus on reskilling of its employees on GenAI domain is a welcome move. As it is, India has already emerged as a top AI-talent hub, which is poised to take pole position in the GenAI space, sooner than later.