Skilling must match AI’s pace

INDIA stands at a pivotal moment in its economic transformation. The newly released India Skills Report 2026 offers one of the clearest signals yet of how rapidly artificial intelligence is reshaping the country’s labour market. According to the report—jointly produced by ETS, CII, AICTE and AIU—over 40 per cent of the IT and gig workforce now uses AI tools for automation, analytics and creative production. As with any large, survey-based assessment, the findings are best read as directional rather than definitive: the report blends candidate test results with employer perceptions and self-reported adoption trends. But despite these methodological caveats, the broad trajectory it highlights is unmistakable. AI is no longer an optional workplace add-on; it has become a structural force.

More than 90 per cent of surveyed employees across sectors report using generative AI tools in some capacity—a high self-reported adoption rate that signals broad familiarity, though not necessarily day-to-day intensity. AI-based recruitment systems are taking hold in technology, BFSI and allied industries. The ISR’s employability metric—derived from the Global Employability Test and employer feedback—has nudged up to 56 per cent from the previous year’s 55 per cent, signalling improved job readiness among the tested population rather than a measure of the national labour market. And, significantly, women have surpassed men in this employability metric for the first time, aligning with broader trends of hybrid work, digital skilling and rising female participation in tech-adjacent roles.

What emerges is a mixed but meaningful portrait: skills are deepening, adoption is widening, and younger workers—especially Gen Z freelancers, 71 per cent of whom report receiving some form of AI training—are adapting more quickly than institutions. If even a portion of these figures reflects ground reality, India is taking early steps towards what could be called a fair tech transition: a system in which technological acceleration is matched by evolving skills and widening participation.

But fairness is not self-sustaining. Market forces alone cannot guarantee equitable outcomes. AI-driven productivity gains may boost growth, but they could just as easily entrench inequality, erode job security and expose millions of contract and platform workers to volatility without safety nets. India’s ambition to remain the world’s skills capital—and supply an estimated surplus of 45 million skilled workers by 2030—hinges on whether the benefits of AI diffusion are shared, not selectively concentrated.

Ensuring this balance requires stronger worker protections. India’s regulatory frameworks have not kept pace with AI’s integration into everyday work processes. Algorithms increasingly mediate recruitment, performance evaluation, task allocation and productivity measurement. Yet workers—particularly those in the gig and informal sectors—have limited visibility into how automated decisions are made or how errors can be challenged. The opacity is not merely a design flaw; it is fast becoming a labour issue. Workers should have a right to basic explanations of AI-driven decisions, especially in hiring and performance management. High-use AI systems should be subject to independent audits to prevent the reproduction of bias, unfair exclusion or wage suppression through opaque optimisation. And industries with heavy AI adoption—from BFSI to logistics and IT—should map potential displacement risks well in advance and plan for retraining rather than reactive layoffs. The same safeguards are essential in the platform economy, where livelihoods may hinge on algorithms workers cannot see, challenge or understand. Minimum standards for transparency, predictable earnings and accessible grievance mechanisms are fundamental if India’s digital economy is to be built on a stable labour foundation.

A fair transition also requires a national upskilling mandate. India’s demographic advantage—an average workforce age of just 28 years—remains a powerful asset, but it is also a ticking clock. Automation is entering job roles faster than institutions can adapt.

 Encouragingly, the India Skills Report points to the rise of Tier-2 and Tier-3 cities such as Lucknow, Kochi and Chandigarh as employability hubs, helping narrow the urban–rural skill gap. Women’s relative gains in employability further suggest that digital skilling and hybrid work are reducing long-standing participation barriers. 

But sustaining this momentum demands deeper institutional alignment. Basic AI literacy must become as fundamental as computer literacy once was. Employers in high-growth sectors should share responsibility for continuous learning through annual training credits or co-funded reskilling schemes. 

And a national framework for apprenticeships and micro-credentials would allow workers to pivot rapidly into emerging roles without long academic cycles. Crucially, MSMEs, gig platforms and regional employers—who collectively absorb millions of young workers—must be integrated into the skilling ecosystem through incentives, subsidies and shared digital infrastructure. Upskilling cannot remain the preserve of formal, stable employment.

Perhaps the most urgent reform lies in the realm of social protection. India’s labour market has become too mobile, too hybrid and too fragmented for traditional employer-tied benefits. Workers today shift between roles, platforms and sectors with increasing frequency, yet essential protections—health insurance, accident cover, paid leave and pensions—remain linked to specific employers. A fair tech transition requires universal worker-owned benefit accounts, linked to digital worker IDs and capable of receiving contributions from multiple employers or platforms. Social insurance schemes must be flexible enough to adjust to fluctuating incomes, a daily reality for gig and freelance workers. And skilling credentials and training histories must be fully portable so workers can carry their capabilities across sectors without losing recognition.

These reforms are not abstract ideals; they are practical economic necessities. Hiring intent for FY 2026–27 has risen from 29 per cent to 40 per cent, and BFSI and fintech are projected to generate 250,000 new jobs by 2030. 

A dynamic labour market cannot function on rigid benefit structures designed for a previous era. The benefits must follow the worker, not the job.

India’s AI moment is not simply about technological sophistication. It is about governance, social equity and long-term competitiveness. The India Skills Report estimates that the country already holds 16 per cent of global AI talent, with a projection of 1.25 million AI professionals by 2027. 

This position will be difficult to maintain unless the social contract underpinning the workforce evolves alongside the technology shaping it. Industry must commit to responsible AI deployment and meaningful investment in training. 

Government must modernise labour protections, create interoperable benefit systems and expand national skilling pathways. Academic institutions must move beyond rote, tool-based instruction and instead prepare learners for hybrid human–AI collaboration.

A fair tech transition is within reach. But it will require deliberate design—a policy ecosystem ensuring that AI amplifies rather than marginalises human potential. India has an opportunity not only to lead in AI talent but to shape the global model of an equitable digital economy. 

The transition will define the next decade. The question is whether it will be fair.

The writer is a policy analyst focusing on employment, demographics, and economic development. He writes on the intersections of workforce trends, technology, and industrial policy