Goldman Sachs India AI Tracker: Rising Adoption Yields Early Productivity Dividends

Overview

This report is the inaugural release of Goldman Sachs' 'India Generative AI Tracker,' designed to monitor AI adoption in India and its impact on the labor market, productivity, and service exports using high-frequency data. The core conclusion indicates that AI is penetrating beyond the technology sector into broader enterprise segments and has already translated into early productivity gains. Although there are market concerns regarding AI displacing jobs, actual hiring data demonstrates resilience in labor demand within relevant industries.

Core views

Significant Expansion of AI Adoption Scope: The report notes that mentions of 'AI' by management teams of listed companies in India have surged sharply over the past two years, with the trend spreading widely from the Information Technology (IT) sector to other segments. Among the 11 covered GICS industries, AI mention growth was particularly pronounced in the Financials and Healthcare sectors, indicating that AI technology is becoming a cross-industry focal point rather than being confined to tech companies. Early Productivity Dividends Are Evident: Data shows that AI applications are beginning to translate into improved corporate efficiency. The ratio of sales to employee costs has improved for both IT and non-IT service companies, with IT service firms reaching their highest level in six years in Q4 2025. This metric is viewed by the report as an early empirical signal of AI-enabled productivity, meaning that revenue generated per unit of labor cost is increasing after firms introduce AI. Labor Market Shows Structural Resilience: Despite widespread concerns about AI replacing human labor, high-frequency hiring data presents a different picture. According to the Naukri JobSpeak Index, industries assessed as having the highest AI replacement risk actually saw an improvement in hiring willingness over the past six months; hiring in the IT software services sector also remained stable. Furthermore, mentions of 'layoffs' and 'employee turnover' in the tech sector peaked at the end of 2024 and have since declined, although absolute levels remain the highest across all industries, the marginal deterioration trend has halted. Regional Differentiation and Support from Global Capability Centers (GCC): AI-related employment demand shows distinct geographic concentration. The three major GCC cities of Bangalore, Hyderabad, and Chennai account for approximately 56% of GCC employees, and their corporate hiring willingness remains resilient; in contrast, hiring willingness in Mumbai and Delhi has declined. This suggests that high-value service jobs driven by AI are further concentrating in India's core technology hubs.

Analysis framework

The research report adopts an analytical framework of 'high-frequency text mining + macro employment data verification.' First, it quantifies the breadth of AI penetration and identifies turning points in layoff sentiment by statistically analyzing keyword frequencies in management commentary (earnings calls, investor day presentations) for India's top 100 listed companies. Second, it utilizes the Naukri JobSpeak index (covering over 150,000 companies) as a real-time barometer of the labor market, cross-validating theoretical models of AI replacement risk with actual hiring behavior to determine whether AI acts as a 'substitute' or 'complement.' Finally, combining financial data from the RBI covering over a thousand service enterprises, it calculates the sales-to-staff costs ratio to confirm the authenticity of productivity improvements from the financial results perspective.

Methodology notes

• Industry/Industrial Analysis FrameworkVolume-price decomposition

  Sales-to-staff costs ratio

  The report uses this ratio as a core proxy indicator for measuring labor productivity. When this ratio rises, it implies that more revenue is generated per unit of labor input, typically serving as direct financial evidence of efficiency gains brought about by technological progress or process optimization.

• Event Gaming and Behavioral FinanceExpectation Gap/Expectation Management

  Management Commentary Text Analysis

  By tracking changes in the frequency of specific keywords (such as AI, Job cuts) in management speeches, this method captures shifts in corporate strategic focus and turning points in market sentiment. This approach can reflect enterprises' actual attitudes toward new technologies and potential organizational adjustment trends earlier than traditional financial data.

Key data

• IT Services Labor ProductivitySix-Year HighThe ratio of sales to employee costs for IT service companies reached its highest point in the past six years in Q4 2025
• Share of GCC City Employees56%Proportion of total GCC employees in India accounted for by the three major cities of Bangalore, Hyderabad, and Chennai
• Hiring Trend in High-Risk IndustriesImprovementHiring willingness in industries with the highest AI replacement risk increased rather than decreased over the past six months
• Sample Coverage Scope1,182 CompaniesProductivity analysis based on RBI data, covering 208 IT service companies and 984 non-IT service companies

Impact & implications

The report argues that the impact of AI on the Indian economy is moving from conceptual hype to substantive implementation. For India's vast IT and business process outsourcing industry, early productivity gains are a key positive factor for maintaining global competitiveness, helping to offset rising cost pressures. Meanwhile, the resilience of the labor market suggests that AI currently plays more of an 'augmenting' role rather than purely a 'replacing' one, which may alleviate excessive panic in the market regarding large-scale technological unemployment. However, the regional differentiation in hiring willingness also hints that AI dividends may exacerbate regional development imbalances within India, with core technology hubs further siphoning off high-end talent resources.

What to watch

• Whether subsequent quarterly AI mentions continue to spread to non-tech sectors
• Whether the improvement trend in IT services labor productivity can be sustained
• Whether the improvement in hiring willingness in high-risk industries is sustainable
• Evolution of the hiring gap between GCC and non-GCC cities