The stock market loves when IT companies use AI, even though it’s killing off 70% of entry-level jobs.
March 19, 2026
Original Paper
Efficiency Paradox: AI Adoption, Market Valuation, and Workforce Disruption in Indian IT
SSRN · 6384258
The Takeaway
Investors reward the massive boost in profit margins that AI provides, but this 'efficiency' comes by gutting the traditional 'entry-level' hiring pipeline. This creates a scenario where an industry remains financially dominant while ceasing to be a primary source of social mobility and employment.
From the abstract
This study examines the efficiency paradox in Indian IT services: positive stock market reactions to AI adoption disclosures alongside contraction of entry-level employment. Using an event-study framework across 28 AI-related announcements by Tata Consultancy Services, Infosys, Wipro, HCL Technologies, and Tech Mahindra during FY2020-FY2025, cumulative abnormal returns (CARs) are estimated using Nifty IT and Nifty 50 benchmarks with a 200-day estimation window, placebo tests, and cross-sectional