AI Adoption Moderates Entry-Level Hiring in India’s IT Sector: Economic Study

Artificial Intelligence ( AI ) adoption is reshaping hiring priorities in India’s IT sector, moderating entry-level recruitment while increasing demand for advanced and hybrid skill sets, according to a recent study by the Indian Council for Research on International Economic Relations (ICRIER) supported by OpenAI . Titled “AI and Jobs: This Time Is No Different,” the report is among the most comprehensive firm-level assessments of generative AI adoption in India. Conducted between November 2025 and January 2026, it surveyed 650 IT firms across 10 Indian cities.

The study finds that 63% of firms have reported increased demand for candidates who combine domain expertise with AI and data skills , reflecting a growing premium on hybrid capabilities as AI tools become embedded in core workflows. While companies are moderating hiring at the entry level , recruitment at mid- and senior-level positions remains largely stable. Researchers note that this moderation aligns with broader post-pandemic industry trends and should not be attributed solely to AI adoption.

Importantly, roles widely perceived as vulnerable to automation such as software developers and database administrators are among those experiencing the strongest demand growth. This suggests that generative AI is functioning primarily as a productivity-enhancing complement to technical and analytical work rather than a direct substitute for human labour.

Across more than 1,900 business divisions identified as most affected by AI, productivity gains significantly outnumber declines. Divisions reporting higher output with stable or reduced team sizes outnumber those experiencing productivity drops by a ratio of 3.5 to 1 . Nearly one-third of divisions report increased output alongside reduced costs, indicating that AI enables firms to scale operations more efficiently without corresponding reductions in employment.

The moderation in entry-level hiring reflects several structural shifts. AI tools can automate routine coding, testing, documentation, and support functions, allowing existing teams to handle larger workloads. As a result, firms are raising skill expectations for fresh recruits and prioritizing candidates with AI literacy , data skills, and domain knowledge. Many organizations are also emphasizing upskilling existing employees over large-scale fresher hiring, while workforce planning is increasingly guided by productivity gains rather than headcount expansion.

More than half of surveyed firms report supporting AI adoption through awareness or training initiatives, with an additional 38% planning to introduce such programs. However, training coverage remains limited, with only a small share of companies reporting that more than half their workforce received AI-related training in the past year.

Key challenges include shortages of qualified trainers, high implementation costs, uncertain returns on investment, ethical and legal concerns , and organizational readiness gaps.

Overall, the report concludes that AI is transforming hiring patterns by boosting productivity and elevating skill requirements. Rather than eliminating jobs, AI is reshaping workforce needs, slowing routine entry-level hiring growth while accelerating demand for AI-enabled, higher-value roles.