AI doom or boom? Let’s not get over-anxious about the impact of this technology on India’s economy

In the last few years, conversations on artificial intelligence (AI) have made their way from a few company boardrooms and R&D divisions to almost every company’s strategic vision and every investor’s daily life. There is hardly any seminar or conference—be it on healthcare, travel, consumer experience, legal affairs or economics—that doesn’t discuss the AI-led revolution. It is time to assess its impact on India, the world’s fastest-growing major economy.

Let’s examine the key characteristics of our information technology (IT) workforce and then assess how AI could impact consumption and thus GDP growth. According to Nasscom, an industry body, India’s IT sector employs 6 million workers, about 1% of the country’s total employment. The IT workforce has increased at a compounded annual rate of 5.6% in the last three years, slower than the growth of 11.7% in the sector’s dollar revenues (18.2% in rupee terms).

Based on unit-level data from the Periodic Labour Force Survey (PLFS), the IT sector employs a significant share of India’s young and educated workers. About 57% of our IT workforce is no more than 30 years old, with three-fourths aged up to 35 years. A majority is younger than India’s median age of about 29 years.

In comparison, less than 29% of all workers in the country are up to 30 years old, and about two in five workers are no older than 35 years of age. IT’s workforce in India, thus, is much younger than the country’s overall workforce.Our IT workforce is exceptionally educated as well. Of every ten IT workers in India, nine are at least graduates; 20% of them hold a post-graduate or higher degree.