Artificial Intelligence (AI) is “expected to have a long-term impact on the employment of India’s skilled labour force,” and its IT services-led growth model, even as the country continues to enjoy strong economic growth prospects, according to EY‘s latest Economy Watch report.
In its May 2026 edition of Economy Watch, EY said the rapid evolution of AI is expected to reshape employment patterns globally and could have implications for India’s large pool of skilled professionals who have traditionally benefited from the country’s booming IT services sector.
“Alongside, the fast-paced evolution of AI is expected to have a long-term impact on the employment of India’s skilled labour force, which had, hitherto, found placement in the lucrative job market linked to IT services,” the report said.
The observation comes at a time when businesses across the world are increasingly adopting generative AI and automation tools to improve productivity and reduce costs, raising concerns about the future of certain white-collar roles.
For India, the issue carries particular significance. The country’s services exports are heavily driven by information technology and business process management services, sectors that have created millions of jobs and contributed substantially to export earnings over the past two decades.
While AI is widely viewed as an opportunity for innovation and productivity gains, EY’s report highlights “the potential risks that technological disruption may pose to employment if workers are unable to adapt quickly to changing skill requirements.”
The report noted that these developments could influence India’s growth performance “both in the short and long run” and should be factored into future economic planning.
Despite flagging the risks, EY remained optimistic about India’s long-term growth trajectory. Citing Organisation for Economic Co-operation and Development (OECD) projections, the report said India is expected to remain one of the fastest-growing major economies and could become the world’s largest economy in purchasing power parity (PPP) terms by 2063 under favourable conditions.
However, the consultancy said preserving that long-term growth path would require policymakers to account for emerging challenges ranging from geopolitical disruptions and energy security concerns to technological shifts such as AI.
“There is a need, however, to re-strategise India’s growth and development strategy to account for the short-term and long-term challenges that may cause departures from its long-term growth path,” the report said.