Global companies are not pulling back from India because of artificial intelligence. Morgan Stanley’s March 2026 investor presentation on India’s key economic debates shows a different picture. Work is changing, hiring is becoming more selective, and risks from oil and global conditions remain, but India continues to hold its ground in global services.
The report points to steady domestic demand, strong macro starting conditions, and continued strength in services exports. The question is not whether AI weakens India’s position, but how the country adapts as the mix of work moves toward higher skill roles.
Morgan Stanley on why fears around the IT sector are overstated
Morgan Stanley presents India’s services sector as a large and important part of the economy, with the IT segment continuing to play a central role. The firm’s analysis shows India remains deeply linked to global technology spending and delivery models.
The report points to a change in the nature of work rather than a drop in demand. Routine services are seeing slower growth as automation handles repetitive tasks, while more complex work is gaining share.
“India’s services export market share remains healthy,” Morgan Stanley said in its March 2026 India economics presentation.
This indicates that demand is still present, but it is moving toward roles that require higher skill levels.
Morgan Stanley on India’s position in global services exports
India continues to rank among the leading exporters of IT and business services. The data in the report shows India holding one of the largest shares globally in IT and other business services exports.
At a broader level, India also maintains a strong position in overall services exports, placing it among the top contributors globally.
“India ranks second among all countries by share of total Claude.ai users,” Morgan Stanley noted, pointing to strong adoption of artificial intelligence tools.
The firm treats this as a sign that India is keeping pace with changes in technology usage, even as those changes affect how work is distributed.
Morgan Stanley on how artificial intelligence is affecting jobs
The report acknowledges that artificial intelligence will change how work is done across sectors, including IT services.
Its data shows that a meaningful share of workers’ core skills will need to change over the next five years as automation becomes more widespread.
“Share of workers’ core skills that will change in the next five years” remains elevated, according to the report’s labour analysis.
This points to a change in hiring patterns. Entry level roles linked to repetitive work may see slower growth, while demand for specialised roles is likely to rise.
Morgan Stanley on oil risks and external pressures
Morgan Stanley highlights commodity prices, especially oil, as a key external risk for India.
The report shows India’s dependence on imports from the Middle East across crude oil, natural gas, propane and fertilisers.
“Domestic demand remains resilient; however, headwinds are emerging as ongoing geopolitical tensions create a stagflationary risk,” the report said.
Higher oil prices would add to inflation, widen the current account deficit and weigh on growth, according to the firm’s estimates.
Morgan Stanley on why macro stability provides support
Despite external risks, Morgan Stanley says India is entering this phase with stronger macro conditions than in earlier cycles.
The report points to stable inflation, healthier external metrics and policy space as supporting factors.
“While the starting point of macro stability indicators remains favorable, prolonged disruption poses downside risks to growth and could worsen macro stability,” Morgan Stanley said.
Domestic flows and steady economic activity are also helping absorb global volatility, based on the firm’s analysis.
Conclusion
Morgan Stanley’s assessment does not support the view that artificial intelligence is weakening India’s role in global technology services. The report points instead to a change in the kind of work being done, with less focus on routine processes and more emphasis on specialised capabilities.
India’s position in services exports, along with its talent base and cost advantage, continues to support its role in global operations. At the same time, risks from commodity prices and global conditions remain important, as per the report.
Artificial intelligence may slow hiring in some areas, but it does not reduce India’s importance. It changes expectations and raises the level of skill needed for the next phase of growth, as per Morgan Stanley.