India’s employment landscape is expanding, but the evidence points to a more selective labour market in which job creation, digital capability and employment security are becoming inseparable. A TeamLease Employment Outlook Report cited by The Times of India projects a Net Employment Change of 5.4% for the second half of FY 2026-27, up from 4.7% in the previous half-year, even as employers report difficulty finding people with the skills they need.
The shift matters beyond corporate hiring. Employment is one of the systems through which cities distribute opportunity, income and economic mobility. As work becomes more dependent on digital tools and formal compliance, the quality of urban employment will increasingly depend on whether workers can access skills, social protection and career transitions without losing their livelihoods.
The report is based on a survey of 1,239 businesses across 23 industries and 20 cities. It found that 60% of employers planned to expand their workforce, compared with 58% in the previous half-year. The increase suggests that hiring momentum remains positive, but the nature of that expansion is changing. Employers are not simply seeking larger workforces; they are seeking people who can operate in workplaces where technology, customer expectations and regulatory requirements are evolving simultaneously.
That distinction is particularly visible in the adoption of artificial intelligence. According to the report, 85% of employers said their workforce used AI or generative AI tools in some form. However, only 13% reported adoption across more than half of their employees, while 54% limited usage to a quarter of the workforce or less. The most common level of adoption was between 11% and 25% of employees.
These figures suggest that AI is not yet uniformly transforming entire organisations. In many workplaces, it is being introduced function by function, alongside existing roles and processes. Applications such as logistics routing and scheduling, assisted diagnostics in service networks and query handling in customer operations can change how work is performed without immediately eliminating the underlying job.
For urban workers, this creates a different challenge from the simple fear that automation will replace employment. The immediate issue is whether people can work effectively with new systems. A warehouse worker may need to use a digital inventory platform. A retail employee may be expected to manage digital payments, reporting systems and customer engagement tools. The technology may be deployed in a particular function, but the requirement for digital fluency can spread across the organisation.
The survey identifies digital literacy as the most sought-after workforce competency, cited by 59% of employers. Customer experience management followed at 51%, communication skills at 48%, and teamwork, collaboration and adaptability at 44%. These priorities indicate that employability is being defined less by a single technical qualification and more by the ability to combine functional knowledge with digital capability and interpersonal skills.
That combination is also where the country’s skills gap becomes visible. The report found that 72% of employers planning to expand their workforce expected significant or moderate difficulty in achieving their hiring targets. IT roles were cited as the most difficult to fill by 39% of employers facing hiring challenges, followed by sales and marketing at 38%, engineering at 32% and blue-collar roles at 31%.
The pattern is important because it shows that the employment problem is not simply a shortage of jobs. It is a mismatch between the location, quality and composition of available talent and the requirements of expanding businesses. A workforce can be large in absolute terms while still being difficult for employers to hire from when workers lack the specific digital, communication or operational capabilities required.
This mismatch has a strong urban dimension. Cities concentrate employers, educational institutions, service-sector work and technology-enabled businesses, but access to these opportunities is uneven. The report’s coverage of 20 cities provides a national urban frame, while its reference to emerging industrial hubs, Tier-2 cities and digitally connected smaller markets points to the possibility of a wider geography of employment.
However, digital connectivity by itself does not guarantee that smaller cities will capture new opportunities. Workers also need access to vocational education, apprenticeships, reskilling and employers willing to invest beyond immediate recruitment. If training systems remain concentrated in major metropolitan centres, the expansion of digital and consumer-facing employment may continue to favour workers who already have access to better institutions and professional networks.
The report’s findings on labour reforms add another layer to the transition. The four Labour Codes, which the article says came into effect on 21 November 2025, consolidate 29 central labour laws. Their stated significance lies in simplifying the employment framework, strengthening formalisation and creating greater consistency in employment practices. Their practical effect, however, will be experienced through payroll structures, compliance requirements, statutory contributions and workers’ take-home pay.
Among employers surveyed, 39% identified increased compliance and payroll administration effort as the leading impact of the Labour Codes. Higher employer statutory contribution costs were reported by 35%. Another 28% anticipated moderation in salary increments because of higher employment costs, while an equal share foresaw a possible reduction in employee take-home pay due to salary restructuring.
These findings show why formalisation cannot be measured only by the existence of new rules. It also depends on whether workers understand how those rules affect their compensation and benefits. Changes in salary components can alter the relationship between monthly take-home pay and long-term social security contributions. Where compensation structures contain a lower basic pay component and higher allowances, alignment with statutory wage definitions may increase the base used for contributions.
That transition makes communication an administrative responsibility as well as a workplace issue. Employees need to know whether a change in salary structure affects their immediate income, statutory contributions or future financial protection. Without clear communication, formalisation can become difficult to understand even when the underlying objective is to provide greater consistency and protection.
The same question applies to contractual, gig and platform-based work. The article identifies the growth of flexible and technology-enabled employment as a reason to reconsider how social security and worker protection are delivered. As the organisation of work changes, employment systems designed around a conventional employer-employee relationship may not automatically cover every worker in the same way.
Sectoral hiring data indicates where current momentum is concentrated. E-commerce and technology start-ups recorded a Net Employment Change of 12.6%, followed by travel and hospitality at 12.3% and retail at 10.3%. Automotive and electric vehicle and EV infrastructure sectors recorded Net Employment Changes of 10.1% and 9.7%, respectively. These figures point to demand in sectors linked to consumption, digital services, mobility and new infrastructure systems.
The numbers should not be read as evidence that every worker will benefit equally from these sectors. They instead show where employers expect employment conditions to strengthen. The quality of the resulting jobs will depend on the skills required, the location of the opportunities, the form of employment and the degree of worker protection attached to them.
This is why skilling cannot remain limited to preparing people for their first job. The evidence presented in the report points towards a labour market in which workers may need several transitions during their working lives. Continuous learning, accessible vocational education and apprenticeships become relevant not only for young jobseekers but also for workers whose existing roles are being redesigned by technology or regulation.
The institutional responsibilities are distributed. Employers must help workers adopt AI and other digital tools rather than treating technology deployment as a standalone procurement exercise. Educational institutions and training providers must align courses with changing workplace requirements. Governments must ensure that labour reforms translate into understandable and meaningful protection. Workers, in turn, need support to acquire new capabilities without bearing the full cost and risk of transition themselves.
The central evidence is therefore mixed but clear. Hiring momentum is improving, yet employers report persistent difficulty finding suitable talent. AI use is widespread in some form, but deep adoption remains limited to a relatively small share of workforces. Labour reforms may strengthen formalisation, but they can also alter payroll administration, salary structures and take-home pay. Employment growth is visible in several sectors, but its distribution across cities and worker groups remains a central question.
India’s demographic advantage will depend less on the size of its workforce than on the systems that connect people to opportunity. The developments that warrant continued attention are the spread of AI beyond selected functions, the performance of skilling and apprenticeship pathways, the implementation of the Labour Codes, and whether emerging industrial hubs and smaller cities can participate in the next phase of employment growth.
