CNBC's Inside India newsletter: AI is taking over core operations of Indian IT companies

This report is from this week's CNBC's "Inside India" newsletter which brings you timely, insightful news and market commentary on the emerging powerhouse. Subscribe here. Millions of techies and engineers who have built India's multi-billion-dollar IT services industry have a new teammate: artificial intelligence. And embracing this partnership is no longer optional - resistance could mean the end of one's career. On Monday, during its earnings call, India's largest IT company, Tata Consultancy Services, which wants to achieve "AI fluency at scale," told analysts it now has 217,000 employees that have "higher order AI skills," up from 180,000 barely a month ago. TCS is training all its employees on working alongside and with AI. The world's second largest IT services company told analysts last month that it was particularly keen on hiring "AI natives" - mostly young people adept at using a wide range of modern AI tools in their jobs. "These people [trainees] really know how to treat AI as a teammate," Aarthi Subramanian, executive director and chief operating officer at TCS had told analysts during the annual meet on Dec. 17. Turns out, it is not the only major Indian company doubling down on teaming up humans and AI. More than a third of the country's IT companies are using artificial intelligence for 40% of their core operations, according to a report by India's National Association of Software and Services Companies, or Nasscom, and job search platform Indeed. On an average, companies are seeing 25%-35% improvement across important key performance indicators as a direct impact of using AI, the report said. Almost all (97%) expect work to be done by teams made up of humans and AI by 2027, said the report, based on findings of a survey of 120 human resource heads at IT companies. The paring could be between a person and either an AI tool or an AI agent. AI will take the lead role in most of these teams, barring a few positions that require human judgment, empathy, and hands-on presence, Sashi Kumar, managing director of Indeed India and Ketaki Karnik, head of research at Nasscom, told CNBC. Skills challenge With AI technology evolving rapidly, the key question is: Can employees upskill as quickly as the job demands? "AI has become one of the most important skillsets for freshers entering Indian IT services companies," said Sachin Alug, chief executive at global IT staffing firm NLB Services. Nearly a quarter of all fresher roles now require AI or data-related skills, up from just 5%-10% three years ago, said Alug, adding that AI skilling in India needs urgent attention because the talent gap is widening fast as demand for AI-ready workers grows. The Indian government's policy think tank, Niti Aayog, in a report in October said, "Supply for AI talent is now 50% of the current demand in India and is expected to further lag in the next few years." Niti Aayog said that in a business-as-usual scenario, "the headcount in the tech services sector could...

Preview: ~500 words