How India's IT services sector, which employs 6M people, contributes ~7% of GDP, and generates $300B+ annually, is shedding jobs as AI automates formulaic work (Financial Times)

The Financial Times reports that AI is taking over routine, formulaic tasks within India's IT services industry. This shift is leading to a noticeable reduction in jobs that previously relied on repetitive coding, testing, and maintenance work. Companies are deploying machine-learning models to handle these activities faster and with fewer errors. As a result, employment numbers in the sector are beginning to decline.

Adopting AI-driven automation requires firms to purchase or develop suitable models and integrate them into existing delivery pipelines. Existing staff must be retrained to supervise AI outputs, handle exceptions, and move toward more complex design and consulting roles. These transitions involve both direct costs for software and indirect costs for training programs and potential downtime. Workers may also bear personal costs if they need to acquire new certifications or change job functions.

AI automation currently works best on well-defined, repeatable processes where inputs and outputs are clearly specified. Tasks that involve ambiguous client requirements, creative problem solving, or nuanced stakeholder management remain difficult for existing models to handle reliably. Consequently, areas such as solution architecture, bespoke software development, and high-touch consulting are less susceptible to immediate job loss. The technology’s effectiveness stops where human judgment and contextual understanding are essential.

For engineers, the changing landscape means a shift from writing routine scripts to overseeing AI-generated code, validating results, and focusing on higher-level system design. Upskilling in AI oversight, data engineering, and domain-specific consulting can help maintain employability. If the sector successfully moves workers into these higher-value niches, overall revenue and GDP contribution could be preserved despite lower headcount. Continued monitoring will be needed to see whether the pace of job creation in new roles matches the speed of automation-driven displacement.