Indian companies are accelerating organisational redesign and workforce strategies to capitalise on artificial intelligence (AI) and a young talent pool, even as employees express growing concerns about workplace surveillance and pay equity. According to the latest India findings from Mercer’s Global Talent Trends 2026 report, businesses in the country are demonstrating greater agility and a stronger appetite for structural change compared to their global counterparts.The report, based on insights from nearly 12,000 executives, HR leaders, investors, and employees worldwide—including 650 respondents from India—highlights a defining moment for India’s labour market. Companies are not only embracing AI-led transformation but are also rethinking organisational hierarchies, performance systems, and skills strategies to remain competitive in a rapidly evolving global economy.AI optimism meets surveillance concernsIndian corporate leaders are among the most optimistic globally about AI’s potential. About 54% of C-suite executives in India expect AI to primarily drive business transformation and innovation over the next two years, significantly higher than the global average of 42%. In parallel, 66% of HR leaders are planning to redesign work to optimise human-machine collaboration.However, this optimism is tempered by employee concerns. While 79% of workers trust their organisations to provide the skills needed if jobs change due to AI, a striking 75% worry that AI could be used for workplace monitoring—well above global levels. Notably, 69% of employees see AI’s most valuable role as identifying upskilling opportunities, signalling a preference for growth-oriented applications over surveillance.Skills shift reshaping talent strategiesAlthough talent scarcity is less pronounced in India (42%) compared to the global average (54%), the urgency to shift toward skills-based workforce models is clear. A significant 74% of Indian C-suite leaders rank adopting skills-driven practices as a top priority, outpacing global peers at 63%.This shift is mirrored by employee sentiment. More than half (54%) fear their skills may become obsolete, while 57% want higher pay for in-demand capabilities. The findings underscore a growing link between skills development and compensation expectations, pushing organisations to rethink how they reward expertise.Purpose vs pay: A growing retention challengeThe report highlights a striking paradox in employee expectations. While 74% of Indian workers say a strong organisational purpose helps them thrive—far above the global average of 42%—pay remains the leading cause of attrition. Around 54% of employees are considering leaving their jobs for better compensation.Concerns around fairness are also prominent. About 44% feel underpaid, and 37% want assurance of equal pay for similar roles. In response, 57% of HR leaders plan to address pay gaps between new hires and long-tenured employees, reflecting a broader push toward transparency and equity.Performance management gaps persistPerformance management is emerging as a critical focus area, with 78% of business leaders believing their systems effectively develop talent. However, employee perceptions tell a different story. Only 48% find performance systems effective, and just 40% believe they enable real growth.This disconnect is prompting organisations to refine performance frameworks by leveraging AI, improving feedback mechanisms, and strengthening the link between performance outcomes and rewards.Youth-driven agility fuels transformationIndia’s demographic advantage is playing a pivotal role in organisational change. With Gen Z making up 43% of the workforce—compared to 33% globally—companies are prioritising more flexible and agile structures.Around 80% of Indian C-suite leaders plan to simplify reporting lines, far exceeding the global average of 59%. Similarly, 76% aim to flatten hierarchies (vs 44% globally), and 64% intend to build self-organising teams. These shifts are reflected in higher agility scores, with 48% of Indian firms rating themselves as highly agile, compared to just 29% worldwide.Despite this momentum, alignment gaps remain. Only 45% of employees feel their feedback leads to meaningful change, indicating a disconnect between leadership ambitions and employee experience.As Indian organisations push forward with AI-driven transformation and structural redesign, the challenge will be balancing innovation with trust, and purpose with fair compensation—key factors that will define the future of careers in the country.
