India's outsourcing sector faces AI-driven job cuts

Artificial intelligence is weakening the traditional link between export growth and hiring in India's outsourcing industry. The World Bank found that after the release of ChatGPT, job listings in AI‑exposed occupations fell about 20%, and multinational affiliates reported slower hiring. NASSCOM projects the sector to reach $315 billion in revenue and employ six million people by FY26, but AI enables output to rise without a matching increase in staff, threatening entry‑level BPO jobs that have long served as a bridge to the formal economy.

A Nomura analysis shows that Indian firms added 83,100 AI‑related jobs while recording 31,921 layoffs linked to automation. The data indicate a split labour market: demand for entry‑level workers is weakening, while firms are increasingly hiring experienced professionals with both technical and business expertise. Companies are shifting from full‑time‑equivalent contracts to outcome‑based arrangements as AI boosts productivity.