AI in India: More Job Transformer Than Job Killer, Says Goldman Sachs

• Gen-AI could automate 9–17% of non-agricultural work tasks.

• Only 8–12% of jobs face substitution risk; up to 48% may be enhanced.

• AI may lift annual productivity growth by 0.4–0.8 percentage points.

• India holds just 1% of global data centre capacity—key bottleneck.

Generative artificial intelligence (Gen-AI) is poised to reshape India’s workforce, but not in the way many fear. According to a recent Goldman Sachs report, while AI could automate a portion of tasks currently performed by India’s non-agricultural workers, the technology is more likely to complement human roles than replace them outright.

The analysis suggests that between 9 percent and 17 percent of tasks across India’s non-agricultural economy could be automated, depending on how rapidly AI capabilities advance. Under the bank’s base-case scenario, approximately 13–15 percent of work activities are exposed to automation.

However, the report emphasizes that automation applies to specific tasks rather than entire professions. Most jobs combine routine and complex responsibilities, meaning AI is expected to handle repetitive elements while humans continue to perform functions requiring judgement, creativity, interpersonal interaction, or physical execution.

Limited Job Displacement, Wider Productivity Gains

After weighting occupations by sectoral employment, Goldman Sachs estimates that only 8–12 percent of non-agricultural roles face a genuine substitution risk. In contrast, 42–48 percent of jobs are likely to be augmented by AI tools, with the remainder largely unaffected.

This indicates that nearly half of India’s workforce could use AI to enhance productivity rather than face displacement. The report argues that over the next decade, AI adoption will primarily alter workflows, freeing employees from routine tasks and enabling greater focus on higher-value activities.

The findings arrive as Indian companies—from IT services and banking to healthcare and education—accelerate investment in generative AI technologies.

Sectoral Divide: Services Lead Exposure

Knowledge-driven industries are expected to see the most impact. Fields such as education, healthcare, media, finance, and professional services show higher exposure because they rely heavily on information processing, content generation, and analytical decision-making—areas where AI systems excel.

In healthcare, for example, AI can support diagnostics and data analysis. Financial and professional services can leverage AI for research, risk modelling, and client support.

On the other hand, sectors with a predominantly physical task mix—such as construction, mining, and parts of manufacturing—are less vulnerable to AI-driven automation.

IT-enabled business process services (BPS) and certain telecom and postal services may face relatively higher substitution risk, given their concentration of standardized, codifiable tasks.

Clerical and routine office roles emerge as the most exposed occupation category. Some technician and customer-service roles may also experience displacement pressure. In contrast, skilled trades, machine operations, and other physically intensive roles could see stable or even rising demand.

Boost to Economic Productivity

Beyond workforce adjustments, the report projects measurable macroeconomic benefits. AI adoption could add roughly 0.4 percentage points to India’s annual labor productivity growth over the next decade. If AI capabilities evolve faster than anticipated, that contribution could rise to 0.8 percentage points annually.

Media, education, and healthcare are expected to register some of the strongest productivity improvements.

Resilience in India’s IT Ecosystem

Concerns that AI could undermine India’s outsourcing sector appear overstated, according to the analysis. While the six largest listed IT services firms have reduced their combined workforce by around 64,000 employees, the broader technology ecosystem has expanded.

Global Capability Centres (GCCs) and other tech-related businesses have collectively added approximately 700,000 jobs over the past three years, bringing total employment in the ecosystem to 4.4 million. Software services exports also remain above pre-pandemic trends, suggesting structural resilience.

Infrastructure: The Real Challenge

While India possesses a large pool of skilled technology professionals, infrastructure may pose the greater constraint to AI diffusion.

Currently, India accounts for only about 1 percent of global data centre capacity, compared with 47 percent in the United States and 25 percent in China. The country’s existing capacity stands at roughly 1 gigawatt.

Scaling AI usage will require significant investment in computing power, electricity supply, water resources for cooling, and broader digital infrastructure. Without these foundational upgrades, AI adoption could remain uneven.

Additionally, evolving global policies around cross-border data flows and digital sovereignty could influence services exports. Stricter regulatory scrutiny in regions such as the European Union and growing emphasis on AI sovereignty in the United States may shape how Indian firms deploy and export AI-enabled services.

Overall, the Goldman Sachs report frames generative AI not as an immediate disruptor of India’s labor market, but as a transformative tool—one that could enhance productivity, redefine job roles, and demand parallel investment in infrastructure to unlock its full economic potential.