Tech layoffs signal AI’s rise. India must seize this shift—by skilling its youth and shaping a future where AI empowers, not replaces.
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The global job market has seen a significant upheaval in recent months, with major tech giants executing sweeping layoffs. Many of these are driven by the rise of artificial intelligence (AI). IBM, for instance, has reportedly laid off around 8,000 employees, primarily from its Human Resources division, as part of a broad organisational overhaul. This is not merely a cost-cutting tactic but a strategic shift reflecting the company’s evolving operational priorities in the AI era. Similarly, Microsoft has eliminated over 6,000 jobs—i.e., approximately 3 percent of its global workforce, including that of its AI director—marking one of the largest workforce reductions in its history. Notably, these cuts come despite the company reporting strong financials, including a recorded US$ 70.1 billion in revenue and US$ 25.8 billion in net profit in a single quarter.
Traditional roles—including many in software engineering—are increasingly being automated or phased out, signalling a seismic shift in global employment trends, as companies reshape their human capital in response to advancing AI systems.
As tech giants such as Microsoft and IBM rethink their workforces in response to the AI revolution—Microsoft alone has invested US$ 80 billion in AI infrastructure—few roles remain untouched, except those directly aligned with AI, cloud, and cybersecurity strategies. Traditional roles—including many in software engineering—are increasingly being automated or phased out, signalling a seismic shift in global employment trends, as companies reshape their human capital in response to advancing AI systems. This raises pressing questions about job security and the future of employment in India and beyond.
The rapid integration of AI across diverse sectors and global economies is transforming the employment landscape in unprecedented ways, with India and the world witnessing both disruptive job losses and the emergence of new opportunities. It is estimated that between 2023 and 2027, 83 million jobs will be displaced globally, while only 69 million new roles will be created, resulting in a net contraction of 14 million jobs. This shift is driven by the automation of routine tasks and the deployment of AI tools across sectors—from manufacturing and customer service to legal and financial services.
In the United States (US), most BigTech firms have demonstrated this transformation, with widespread layoffs across a spectrum of roles. Over 62,000 employees have been fired across 284 companies in the first five months of 2025 alone. In May alone, 200 employees were laid off by Google; Meta is set to downsize its staff strength by 3,600 employees in 2025 as part of a ‘performance-driven restructuring.’ The message is clear: no job, irrespective of seniority or specialisation, is immune to the reach of AI anymore.
The effects of AI-related automation are already visible in India, especially in the startup and IT sectors. Over 3,600 employees have been laid off by Indian startups in the first five months of 2025 alone, prompted by cost-cutting measures and the adoption of automation technologies. Ola Electric, for example, has laid off 1,000 of its employees after automating its front-end operations. Similarly, the IT industry—a longstanding pillar of India’s economy—has seen over 50,000 job cuts in 2024, particularly among entry-level programmers and software testers, whose roles are increasingly affected by AI-related automation.
The impact of AI extends beyond technology firms, with sectors such as manufacturing, logistics, and customer support facing disruption due to AI-driven automation of low-skilled and repetitive tasks. Projections for India are stark, with estimates suggesting that 40-50 percent of current white collar jobs may disappear. This could endanger livelihoods at scale and threaten the broader consumption-driven economic growth narrative.
The impact of AI extends beyond technology firms, with sectors such as manufacturing, logistics, and customer support facing disruption due to AI-driven automation of low-skilled and repetitive tasks.
Nevertheless, this disruption is not without opportunity. With the world’s largest youth population—371.4 million people and a median age of 28.4 years—India holds a demographic advantage. If leveraged effectively, particularly by equipping the youth with AI-related skills, India could negotiate this transformation phase and move closer to its ambition of becoming a US$ 10 trillion economy by 2032. Emerging fields such as data science, machine learning, and AI product development are expanding rapidly, offering roles that did not exist a decade ago. More broadly, roles involving knowledge work, content creation, and manufacturing present significant scope for the adoption and use of AI.
Therefore, the future of employment lies in adaptation and up-skilling. As Nvidia Chief Executive Officer (CEO) Jensen Huang aptly stated, “You are not going to lose your job to AI, but you are going to lose your job to somebody who uses AI.” The way forward for individuals and economies is to embrace this paradigm shift, using AI as a tool, not a threat, to stay competitive in an evolving job market.
India could implement a multidimensional strategy focused on workforce transition, technological inclusivity, and evidence-based policymaking to mitigate job loss and unemployment amid rising AI adoption. First, encouraging innovation that complements rather than replaces human labour may help preserve jobs. The Stanford Institute for Human-Centred Artificial Intelligence (HAI )'s ‘Impacts of AI on Worker Productivity’ study, conducted by Bond, highlights that labour/worker productivity has increased by 14 percent due to AI integration. Second, companies may formulate policies to promote the redeployment of workers whose jobs are threatened by AI within their organisations, as the International Labour Organization (ILO) recommends. Strategic investment in reskilling and upskilling programmes is essential, especially in emerging sectors such as—the digital, green economy, precision manufacturing, and customer care sectors.
Despite its recent wave of job cuts, IBM has increased its workforce size and augmented productivity by reinvesting strategically in more human-centric roles such as software development and sales. Conversely, experiences like Swedish ‘buy-now-pay-later’ company Klarna highlight the risks of over-reliance on AI, especially where human interaction is critical.
Strategic investment in reskilling and upskilling programmes is essential, especially in emerging sectors such as—the digital, green economy, precision manufacturing, and customer care sectors.
Education reforms are required to align AI curricula and projects at higher education institutions with industry requirements. Concurrently, more AI-skilling courses should be made available through online learning platforms. Moreover, STEM (Science, Technology, Engineering, and Mathematics) education must aim to inculcate an interest in AI during the school-going years of learners. This approach could prepare India’s youth for future AI-centric job profiles. Periodic impact assessments in sectors that are undergoing AI disruption could be conducted to guide targeted policy interventions.
Despite the potentially disruptive impact of AI on employment in India, the present is also a moment of opportunity. With its vast, young workforce and expanding digital ecosystem, the country should harness AI as a catalyst for inclusive economic growth. By prioritising upskilling, investing in education reforms, and building new pathways for emerging tech to augment human efforts, India can not only mitigate job losses but also provide best practices for the future of work.
Debajyoti Chakravarty is a Research Assistant at the Observer Research Foundation.
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Debajyoti Chakravarty is a Research Assistant at ORF’s Center for New Economic Diplomacy (CNED) and is based at ORF Kolkata. His work focuses on the use ...
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