Artificial Intelligence (AI) has been a prominent discussion of the new age technology over the advancement of “ChatGPT”, which changed the way; we have seen the usages of AI in day to day activities. However, the usage of AI cannot be limited to ChatGPT, over the years, various sectors and activities have increased the extensive utilization of AI to make their sector more efficient. This rise of the new programming language designed to emulate the human intelligence. The impact of AI as a central player in the global market across sector, such as; entrepreneurship, finance, telecom, scientific studies and educational pursuits has transformed and revolutionised the performance and efficiency.

Though, there has been various concern related to the replacement of human or labour work force, due to the extensive usages of AI across various sectors in economy. But, the positive and productive use of AI in the financial sector enhances the workforce to perform productively and efficiently. The fundamental and theoretical premise of AI lies as a replication of the human intelligence (superior) through machine programming languages and software manifestations (McKinsey & Company Report, 2022). This leads to the concern and forecasts the potential displacement of numerous existing jobs with an estimation of 75 million job displacement by 2025. The prediction of job displacement by the extensive usages of Smart AI technological software, Robotics and Machine learning Algorithms alarms the concerning rise of the statistics in AI usages from the World Economic Forum. Although, it promises a creation of 133 million new roles as service managements in various sectors by 2025. But, the concern still remains as “Who will be replaced?” and “Is that a rise of new order of economic activities?”

Globally, the AI market has expanded to nearly 56.67 Billion US Dollars in 2021, projected to surge at an growth rate of 39.4 percent, reaching the valuation of 422.37 Billion US Dollars approximately by 2028 (McKinsey & Company). In India, the reports predict a growth rate of 20.2 percent, propelling the AI market of 7.8 Billion US Dollar by 2025 from 3.1 Billion U.S. Dollar in 2020 (International Data Corporation). The acknowledgement of the reports from McKinsey and International Data Corporation is evident from the proliferation of the rising AI start-ups and its usages across various sectors in Indian economic activities.

Mismatch between the skills to be employed in AI governed or AI centric economic activities and also the re-skilling theory focuses on the potential mismatch between the workforce and the skills demanded to be employed in the economic activities driven by AI and Machine learning economy. Although, this theory emphasizes of the adaptively of the workforce to meet the demands posed by an AI-centric economy. But, the theory of Structural Transformation becomes relevant, emphasizing the dynamic shifts in an economy's composition and functioning due to technological advancements. AI's penetration into sectors such as IT Services and Financial Services signifies this transformation, altering traditional business practices, enhancing productivity, and reshaping industry structures. Moreover, the role of AI in optimization of the productivity and evidence for a more productive and efficient performance of the dominant sectors like IT. Telecom, Banking and Health care draws anther theoretical lens as a framework of innovation and productivity (NITI Aayog, 2022). With various evidence from diverse reports advocates that the application of AI in economic activities is a potential to revolutionize manufacturing, finance, retail, and healthcare (McKinsey & Company). Finally, the framework of social and Economic Equity is crucial, emphasizing the need for fair distribution of AI benefits while mitigating adverse impacts on employment in the labour market.

Moreover, recent reports highlight AI's optimization of consumer experiences and operational efficiencies. However, they also evoke concerns among employees regarding job displacement and the erosion of human skills and identity (McKinsey Global Institute, 2021). The urgency of comprehensive investigations encompassing diverse sectors and firms within India has been emphasized by the McKinsey Global Institute Report (2017) and the Indian FS AI Adoption Survey (2021). While the adoption of new technology in the financial sector has improved performance in the banking system, it has concurrently intensified fears of job displacement among Indian workers (NITI Aayog, 2022). Addressing ethical considerations surrounding AI adoption underscores the necessity for a more regulatory approach to AI in various sectors, emphasizing the need for a nuanced exploration of AI's societal impact. These studies prompt reflections on the ethical implications, cognitive alterations, and well-being ramifications that AI integration might impose, particularly within future workplace environments.

Market Penetration of Artificial Intelligence in India:

The analysis conducted by McKinsey& Company, 2022 on the prevalence of Artificial Intelligence (AI) across diverse sectors in India presents a comprehensive overview. The primary findings indicate a significant presence of AI technology within specific sectors. Notably, the IT Services sector emerges as the frontrunner in AI adoption, followed closely by the Financial Services industry. Conversely, the Construction and Telecommunication sectors exhibit comparatively lower integration of AI technologies within their operational frameworks. These findings align with corroborative evidence from multiple sources; including reports from the Hindu and the Reserve Bank of India substantiate the escalating adoption of AI tools, such as "Chat Bots," within the Indian Banking System, demonstrating an approximate 80 percent adoption rate among banks (The Hindu, 2024). However, the burgeoning integration of AI within pivotal sectors has sparked concerns regarding potential job displacement due to the influx of advanced technological services.

Drivers Influencing AI Adoption in Financial Sectors of India:

Further investigation employing secondary data from the Indian FS AI Adoption Survey 2021 delineates the significant role played by specific variables in augmenting AI adoption within the Financial Services sector in India. Key drivers include enhancements in Customer Experiences, Improved Productivity, Revenue Increment, and Reduced Operational Costs. McKinsey & Company in its report “Building the AI Bank of Future” states that, the higher level of satisfaction of the customer experience have been the key determinant in the adoption of AI in U.S Banks. Further, the reduced costs in employing AI rather than manual labour have reduced the cost of managements and decreased the fraud cases in banking sectors (Indian FS AI Adoption Survey 2021). Since, cost minimization and high productivity is the ultimate goal of any firm.

The adoption of AI in sectors is poised to minimize costs for firms and boost productivity. However, the increased adoption of AI is likely to install fear of job displacement and, to a large extent, lead to unemployment for a significant portion of the labour force.

Implications and Potential Disruptions in the Labour Market:

The escalating integration of AI within critical sectors like Finance, IT Services, and Healthcare forecasts significant disruptions within the Indian labour market. While AI promises economic advancement and operational efficiency, apprehensions regarding job displacement and workforce restructuring persist. Studies worldwide suggest that the rapid evolution of AI and its associated technologies may result in the displacement of existing jobs. Predictions indicate that by 2025, approximately 75 million jobs could be replaced by AI, while concurrently creating around 133 million new roles (World Economic Forum). This trend, if extrapolated to the Indian context, could potentially reshape the employment landscape, compelling a revaluation of workforce skill sets and job roles.

The integration of Artificial Intelligence (AI) across diverse sectors in the Indian economy marks a significant technological shift, notably prominent in IT Services and Financial Services. AI tools like "Chat Bots" in Indian Banking reflect a transformative strategy enhancing efficiency and customer experiences yet evoke concerns of job displacement and labour market uncertainties. While AI promises enhanced productivity and consumer revolution across Finance, Manufacturing, Retail, and Healthcare, predictions hint at potential job displacement with 6% of job displacement or the work force have to look for an alternate job with the emergence of new roles. Proactive measures, led by policymakers, industries, and educational institutions, must focus on up skilling initiatives to align the workforce with an AI-driven economy. Comprehensive policy frameworks are vital to balance technological progress with workforce sustainability, ensuring equitable distribution of AI benefits while mitigating adverse employment effects. Managing AI's transformative potential requires a balanced strategy that optimizes AI benefits while safeguarding workforce interests, steering India towards an inclusive, technologically empowered future.

Data from the reports issued by the McKinsey Global Institute (McKinsey & Company) and the Indian FA AI Adoption Survey 2021 reveals that the extensive integration of Artificial Intelligence (AI) in the economic activities across sectors in India, documents a rise of transformative change and adaption of new employment of the AI for productivity. The study also reveals that the IT Services sector leads the way with a dominant 51.80% adoption rate, closely followed by the Financial Services industry at 20%, showcasing a persistent presence of AI technologies. However, sectors like Construction and Telecommunications exhibit relatively lower integration, standing at 1.50% each, indicating an uneven distribution of AI adoption across diverse sectors. These findings, derived from McKinsey & Company Data, highlight the penetration of AI in the Indian labour market. However, the reports from the Indian FS AI Adoption Survey 2021 documents key variables such as “Customer Experiences” and “Increased Productivity” are correlated for the adoption of AI in the Banking sector and IT sector of India.

NITI Aayog Report, 2021 , McKinsey & Company Report, 2022. International Data Corporation and Indian FS AI Adoption Survey (2021).