India’s white-collar middle class is under growing economic strain, as AI-led job cuts, stagnant salaries, and collapsing consumption hit corporate profits and household budgets alike, warns Marcellus Investment Managers founder Saurabh Mukherjea.
In a blog , Mukherjea laid bare the economic squeeze facing India’s middle class. Since Diwali 2023, India’s corporate earnings growth has slumped, dragged down by a sharp slowdown in consumption, which makes up 60% of GDP.
At the heart of the consumption crisis is a stark reality: job creation for white-collar workers has decelerated, and real wages have stagnated.
“The job market is suffering both from a post-COVID hiring binge and the more permanent impact of AI replacing human roles,” Mukherjea writes.
During the pandemic, companies rushed to hire. Indian IT firms alone added nearly 800,000 workers between 2020 and 2022, betting on a long-term digital boom. But demand cooled in 2024, triggering mass layoffs—even at giants like Google, Microsoft, and TCS. Now, as Mukherjea notes, even financially flush firms are shedding staff.
What’s more worrying is the structural shift: AI is automating even complex office tasks. Google has admitted bots now handle a quarter of its coding. Marcellus itself has found that AI research rivals the work of seasoned analysts.
Mukherjea cites a seminal 2003 paper by economists Richard Murnane, David Autor, and Frank Levy, who warned that automation would erode middle-class jobs—especially those involving routine or non-cognitive skills.
“Their insights, though US-focused, now apply to Indian white-collar workers too,” he says.
This disruption is showing up starkly in paychecks. Analysis of India’s 50 largest listed companies reveals that average salaries have failed to keep up with inflation since FY16. Middle-class workers relying solely on wage hikes are losing ground even against basic living costs like food.
India’s largest employers are pivoting fast. In July 2025, TCS CEO K Krithivasan said the firm will cut its workforce by 2%, citing large-scale AI adoption. HCL Tech’s CEO C Vijayakumar went further, pledging to double revenue with half the headcount.
The middle class, once the engine of India’s consumption story, now finds itself at the sharp end of an AI-powered realignment—earning less, saving nothing, and spending cautiously.
