Contents Foreword The steam engine rewired factories. Electricity redefined speed. The internet collapsed distance. And now, AIstands as the next great catalyst—not just shifting how we work, but challengingwhat work even means. In the past six months alone, we have seen adramatic acceleration: Tech industry has moved from cautiousexperimentation to scaling AI across service delivery, internal operations, and even revenue generation. Yet,behind the headlines of productivity boosts and AI copilots lies a far more complex and nuanced reality.Leaders are divided between hailing it as agrowth multiplierand raising critical questions about ROI, Theparadox is striking! While AI promises to decouple growth from headcount and unlock non-linearproductivity, it also risks displacing foundational roles, disrupting traditional career paths, and reshaping thebottom of the talent pyramid. Clients, too, are reshaping their expectations; no longer content with costsavings alone but demanding AI-driven outcomes, risk-sharing, and strategic alignment. As contracts evolve This report dives deep into thesetensions and transitions. It captures emerging realities from the trenches—leaders grappling with upskilling dilemmas, delivery teams recalibrating productivity metrics, and organizationsrewriting the rules of talent, structure, and value creation. We spotlight what it takes to move beyond AI is not just a technology—it is an opportunity to shape anew working world. Compared to the measure of afirm’s technical prowess in the beginning of this journey, it is overwhelmingly becoming a test of leadershipvision, organizational courage, and systemic agility and receptivity towards transformational change. The Let’s get into it. Happy reading! Sangeeta GuptaSenior Vice President andChief of Strategy, Nasscom Nitin BhattTechnology Sector LeaderPartner, EY LLP India Executive summary We stand at a rare, pivotal moment in business history—a tipping point, where long-held assumptions abouttalent, delivery, and growth are being rethought and rebuilt. This report brings a grounded, insight-rich lens tothe evolving AI landscape, outlining how India’s IT services and BPM industry must move from experimentation 1.Decoupling scale from size: Rethinking the workforce equation Growth is no longer tethered to hiring curves. For decades, revenue scaled linearly with Full-Time Equivalentpositions (FTEs). But AI is severing that link. Delivery teams are now pods of humans + AI agents. Value is measurednot in hours clocked, but impact created. Client expectations have followed suit—demanding outcome-linked pricing,shared risk, and faster time-to-value. This is not just commercial reform—it is a redefinition of performance itself. 2.Fast forward, built to last: Capability-led work design Yes, AI boosts productivity. But value realization is not unlocked until deliberate role reconstruction accompanies it.Tasks and jobs must be redesigned from an AI-first lens to achieve this. On the flip side, removing repetitive work alsodismantles traditional learning curves. Entry-level talent is skipping foundational tasks, while experienced mid-managers, the bearers of domain nuance, are being displaced in optimization initiatives. The result: Accelerated 3.Beyond the ladder: Rise of skill-first careersThe linear career path is broken. Tenure is no longer a proxy for talent. In the AI-first world, career progression looks more like a lattice—fluid, skill-led, nonlinear. Roles are disaggregated and reassembled. Some individual contributorscould even lead impact at the top. Skill density, not seniority, becomes the new currency. This requires a mindset and 4.Hybrid teams: Orchestrating performance inHuman+AIpods The future is not Human or AI agents—it is Humans + AI agents. Across delivery pods, AI agents are co-performingalongside humans, recommending actions, resolving queries, and even making autonomous decisions. Butperformance models, interaction and risk frameworks, and governance structures have not caught up to this reality 5.Rewriting the social contract: The future of work is everyone’s problem AI is not a technology shift—it is a structural reordering of how we define work, assign value, and build institutions. Itredraws the line between human ingenuity and machine capability, demanding that we rethink not just delivery, buteducation, employment, and equity itself. In India, the early signals are already emerging. Fresher hiring is slowing—not due to lack of work, but because the entry-level scaffolding is eroding. The issue is no longer just reskilling; it isabout redesigning how talent enters, evolves, and thrives in an AI-first economy. This is a systemic challenge—and The fundamental question is no longer how we use AI, butwhat kind of society we build around it. Leaderswho move with vision will shape a future that is not only moreproductive, but moreinclusive,creative, andhuman by design. Chapter 1 IT services re-engineered