Goldman Sachs: AI job losses in India offset by productivity gains

Goldman Sachs has projected that the rise of artificial intelligence (AI) will lead to significant productivity gains in India, potentially outweighing the job displacement caused by automation, analysts say. In a recent report, the investment bank estimated that AI could boost India's gross domestic product (GDP) by as much as 1.2% annually over the next decade, as businesses adopt AI tools to streamline operations, enhance decision-making, and reduce costs. However, the same report warned that up to 300 million jobs globally could be affected by AI, with India being particularly vulnerable due to its large services sector and outsourcing industry. Despite these concerns, Goldman Sachs analysts suggest that India's young, tech-savvy workforce and strong digital infrastructure position the country to benefit from AI rather than suffer from it.

The report highlights that India's IT and business process management (BPM) sectors, which employ millions, may see the most disruption. Yet, analysts argue that AI will create new roles in AI development, data analysis, and cybersecurity, offsetting losses in routine tasks. For instance, the banking, financial services, and insurance (BFSI) sector is expected to use AI for fraud detection and customer service, potentially reducing manual work but also generating demand for AI specialists. The table below summarises key projected impacts across Indian sectors, based on the report's data:

Sector	Estimated job displacement (%)	Estimated new job creation (%)	Net productivity gain (%)
IT & BPM	15-20	10-12	8-10
BFSI	12-15	8-10	6-8
Retail	10-12	5-7	5-6
Healthcare	8-10	6-8	4-5

Goldman Sachs' optimism is rooted in India's demographic dividend. With a median age of 28 years and over 65% of the population under 35, the country has a large pool of workers who can adapt to new technologies. The government's push for digital literacy and initiatives like the National AI Strategy further support this transition, analysts note. Moreover, India's startup ecosystem, valued at over $150 billion in 2026, is already leveraging AI for solutions in agriculture, education, and fintech, potentially creating millions of high-value jobs.

However, challenges remain. The report cautions that without adequate reskilling programs, up to 20% of workers in low-skilled jobs could face long-term unemployment. Analysts emphasise the need for public-private partnerships to train workers in AI-related skills. Additionally, regulatory frameworks must evolve to address ethical concerns around AI, such as bias and data privacy. Despite these hurdles, the overall outlook is positive, with Goldman Sachs concluding that AI will be a net positive for India's economy, boosting productivity by up to 2% annually by 2030.

"The potential for AI to drive productivity gains in India is substantial, but it requires proactive policies to ensure that workers are not left behind. The government and private sector must collaborate to upskill the workforce and create a supportive ecosystem for AI innovation," analysts say.

In conclusion, while AI may disrupt certain jobs in India, the broader economic benefits—including higher GDP growth, increased efficiency, and new job categories—are likely to outweigh the negatives, according to Goldman Sachs. For investors and businesses, this presents opportunities in AI-driven sectors such as fintech, edtech, and healthtech. To stay updated on market trends and investment opportunities, visit MarketToMoney.co.in.

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