India's white-collar job market is experiencing a dramatic slowdown, with employment growth plummeting from 11% annually to just 1%, according to Saurabh Mukherjea, founder of Marcellus Investment Managers. Speaking on a recent podcast, Mukherjea highlighted the severity of this decline, noting that what used to double every six years has now flatlined, representing dramatic stagnation in a sector that once powered India's economic growth.

Sharp Decline in Employment Growth

The transformation in India's job market has been stark and swift. Between 2010 and 2020, white-collar employment surged, driving upward mobility across major cities including Bengaluru, Pune, and Hyderabad. However, this trajectory has completely reversed, with growth projections for 2023 to 2025 showing employment expanding at merely 1% per year.

Tech Sector Bears the Brunt

The technology and customer experience sectors face the most acute risks, representing India's largest private-sector employers with 8 million jobs at stake. Mukherjea referenced a comprehensive report by NASSCOM, Boston Consulting Group, and NITI Aayog that projects significant job displacement due to artificial intelligence disruption.

The report's worst-case scenario forecasts that 2 million jobs—representing 25% of the total workforce in these sectors—could vanish by 2031. Mukherjea emphasized the credibility of this analysis, stating it represents top-tier research from established think tanks and consultancies rather than speculative forecasting.

Current Job Market Reality

The employment crisis extends beyond future projections, with visible cracks already appearing in the market. India's IT sector, which previously maintained 16% annual growth for a decade, is now contracting. Current data shows the sector losing 10-12% of tech jobs annually, marking a significant reversal from historical trends.

The World Bank's South Asia Development Update corroborates these trends, reporting a 20% decline in job postings for tech and customer experience roles, directly attributed to the rise of generative AI technologies.

Broader Economic Implications

The employment challenges extend beyond the technology sector, with potential impacts anticipated across media, finance, law, and logistics industries. Mukherjea characterized the situation as putting India's middle class "in the crosshairs" of this economic transformation.

The convergence of multiple indicators—from the NITI Aayog report to actual job cuts by major employers—represents what Mukherjea described as "a stack of red flags" all pointing toward continued employment pressure. He emphasized that this represents a live event rather than a future forecast, requiring immediate strategic response to prevent permanent economic damage.

Market Response and Outlook

The employment situation reflects broader structural changes in India's economy, moving away from the job growth patterns that characterized the previous decade. The shift from double-digit growth to minimal expansion represents one of the most significant labor market transformations in recent Indian economic history.

Mukherjea's analysis suggests that the current employment challenges require urgent attention and strategic intervention to address the underlying factors driving job market stagnation across India's key economic sectors.

India's deep tech ecosystem is entering a more consequential phase where revenue visibility, intellectual property-led innovation, and execution discipline are taking precedence over grand narratives. The sector has demonstrated remarkable resilience, attracting $1.57 billion in funding, marking a 25.8% increase over the previous year, even as the broader Indian technology sector faced headwinds.

Funding Performance and Sector Leadership

The deep tech sector's performance stands in stark contrast to the overall technology funding landscape, which recorded a 15% year-on-year decline. Investment activity was predominantly concentrated at the early stage, which raised $966 million and accounted for 61% of total deep tech funding.

Generative AI clearly outperformed other segments, raising $417.6 million, representing a 201.8% year-on-year increase. According to Neha Singh, Co-founder of Tracxn, this strong traction is being driven by rapid advances in AI capabilities and accelerating enterprise adoption.

Commercial Viability Takes Center Stage

Anand Sri Ganesh, CEO of NSRCEL at IIM Bangalore, identified several deep tech segments showing genuine commercial promise, including AI and GenAI, robotics, IoT, drones and defence technology, medical devices, and biotech and life sciences. What differentiated successful startups was not novelty but preparedness, with founders increasingly validating both business and technical propositions before going to market.

For investors like Ashish Taneja, Founding Partner and CEO at growX ventures, the real signal was not capital inflows but revenue behavior. Defence and aerospace systems, space-tech subsystems, industrial robotics, AI-led enterprise infrastructure, and climate-resilient agri-tech stood out as sectors with strong fundamentals.

"The strongest signal was pilots converting into repeat contracts, procurement-led demand from government and large enterprises, and early visibility on unit economics despite low production volumes," Taneja noted.

Policy Support and Infrastructure Development

The government's commitment to deep tech development is evident through significant policy initiatives. Jogin Desai, Founder and CEO of Eyestem, pointed to the launch of the RDI fund as a catalyst that could shape a new generation of globally competitive deep tech companies over the next five years.

Anjali Bansal highlighted three key areas demonstrating commercial readiness: the energy value chain, precision engineering and manufacturing, and space technology. She noted that startups like Agnikul, Pixxel Space, and Skyroot are demonstrating that Indian innovation can lead in space tech with quality, ambition, and cost-competitiveness.

Investment Discipline and Future Outlook

The funding environment has become more disciplined, with startups being evaluated with a sharper focus on commercialization, early revenue traction, and sustainable unit economics. Singh observed that valuations are increasingly milestone-linked, with capital flowing largely from specialized funds, corporate investors, and government-backed platforms.

"Funding shifted from valuation-led rounds to milestone-based capital, with a sharper focus on capital efficiency, technical depth, and speed of iteration," Taneja explained.

Corporate participation from groups like L&T and Tata is creating credible pathways to market through partnerships and offtake commitments. The sector has attracted over $8.51 billion in funding over the last decade, according to Tracxn data, indicating sustained investor interest despite market volatility.

The consensus among experts suggests that India's deep tech story is no longer about capital attraction but about converting technology into durable businesses. As regulatory clarity improves and shared testing and manufacturing infrastructure expands, the gap between narrative-driven ventures and execution-led companies is expected to widen, with success increasingly dependent on proof, patience, and performance.