How AI can optimize India’s demographic dividend
India’s workforce will need new skills if it is to reach its full potential. In the next five years, agentic AI will redefine 10.35 million Indian jobs, according to the 2025 Workforce Skills Report by ServiceNow and Pearson.1 A range of digital drivers, including demand for Global Capability Centers and rapid nationwide digitization, will add nearly 3 million new tech jobs to India’s economy.
If Indian enterprises can upskill their workers to take advantage of new technologies and shifts in demand, they stand to unlock huge gains in revenue and competitive advantage—while also averting a potential economic crisis driven by rapid population growth, often referred to as the demographic dividend.
Empower the workforce
India’s business leaders must rethink their approaches regarding upskilling workers and using AI more broadly. More than two-thirds (68%) of Indian enterprises are still in the process of identifying the skills they’ll need to carry out their AI strategies, according to the ServiceNow Enterprise AI Maturity Index 2025. Meanwhile, 57% of Indian business leaders say their employees are fearful of losing their jobs to AI.
These figures are some of the highest in the world. To address employees’ uncertainty, leaders should use AI to empower their workforce, not replace it. That means shifting from labor-centric business models to AI-centric ones, where AI closes productivity gaps and maximizes every employee’s impact on operations, revenues, and market share.
Upskilling is crucial to this transition, particularly as competition for talent heats up. Leaders can employ AI to make the upskilling process more personalized and effective at a greater scale. Organizations that seize this upskilling opportunity will be positioned to experience stronger results than those focused on short-term cost reductions alone.
Reunify the fractured organization
So far, 25% of Indian enterprises have successfully transformed their businesses with AI, according to our research. Even fewer are using AI to innovate and reimagine their business models.
The biggest obstacle to progress is data security. Part of this challenge lies in the complexity of how data is stored, processed, and used across teams, with fragmentation exacerbating issues for Indian enterprises. Only 42% of leaders strongly agree their organization is aligned on AI strategy across departments.
Despite enterprises' investments in data lakes and analytics, just 54% have made significant progress on connecting their data and operational silos, our research found. This figure is unchanged from last year. Meanwhile, 67% say they’re building and deploying AI from multiple internal task forces—potentially trapping successful innovation and implementation in silos.
Before Indian enterprises can put AI to work effectively, they must connect these silos. That means developing a cohesive vision for AI that’s endorsed by all leaders and teams and includes common priorities and clear values across business functions. This can help ease workers’ anxieties about the impact of AI.
Enable human-AI collaboration
For India to become an AI-centric economy with greater resilience and growth, business leaders must focus on upskilling the workforce to collaborate with AI rather than compete with it. More than half (53%) of Indian enterprises that reinvented their workflows for better collaboration between AI and humans have experienced significant revenue growth, compared to 37% that focused on enhancing existing processes with AI, our research found.
Such upskilling efforts must go beyond technical proficiency in AI tools. India’s business leaders will need to double down on skills that are uniquely human, such as creativity and critical thinking. This will free workers from mundane tasks and empower them to focus on rewarding responsibilities and innovating.
Leaders will also need to cultivate an environment that encourages employees to test, learn, and develop AI solutions. This is crucial to optimizing India’s demographic dividend in a way that delivers on business outcomes, builds trust with India’s workforce, and strengthens the entire nation.
Gain more insights in our global Enterprise AI Maturity Index report.
1 ServiceNow and Pearson, 2025 Workforce Skills Report