AI to drive reskilling in IT sector but job loss fears misplaced: Axis Bank chief economist

Artificial intelligence (AI) will compel India’s IT companies to upskill their workforce and reconsider their strategies, but concerns about widespread job cuts are unfounded, according to Neelkanth Mishra, Executive Director‑Designate at the World Bank and Chief Economist at Axis Bank.

“There is considerable pivoting and strategising that every firm will need to undertake. Yet the current alarm and anxiety over massive layoffs are, in my view, premature at this stage,” Mishra told reporters on the sidelines of an event organised by the Internet and Mobile Association of India (IAMAI) in Mumbai.

He said India’s services exports continue to expand strongly despite rapid advances in AI.

“Even in the month of April, services export growth was 15 per cent in dollar terms. So it is growing faster than GDP,” he said.

Mishra said AI is altering the structure of the IT industry, with some work moving from outsourced service providers to in‑house teams.

“The organisational boundary itself may be shifting because of AI… when we look at the industry revenue from a macro perspective… you have to combine GCCs and Indian IT,” he said.

He said the key challenge for IT services companies will be managing the transition by reskilling their workforce.

“Does that mean that there is no risk going forward? No, there is significant risk… there is a significant amount of transition that all of these IT services companies need to go through in terms of reskilling of people,” he said.

According to Mishra, companies are likely to hire more talent in areas such as design, user interface (UI), user experience (UX) and deployment, even as demand for routine coding work changes.

Commenting on recent layoffs in some software companies, Mishra said such firms are the first to adjust because software development is their biggest cost. However, he said lower software development costs could increase overall demand for software.

“But on the whole, it does seem to me that the Jevons paradox… is actually playing out. As the cost of writing software falls, the amount of software written goes up,” he said.

On the broader economy, Mishra said lower energy prices are expected to support a recovery in India’s growth momentum after a temporary slowdown.

“With energy prices now coming down, I expect that the growth momentum that we saw in February should revive in another maybe one or two months… we were growing at 7.5-8 per cent in February and there’s no reason why that shouldn’t revive in the next two years,” he said.

Published on July 2, 2026