Small Firms, Big Tech: AI Job Demand in India's MSMEs Jumps 164%

As demand for artificial intelligence-linked skills surge sharply by 164% in FY26 in the MSME sector, India's workforce is becoming more geographically scattered, as per a report. 

Indian MSMEs are changing their hiring patterns as they expand, adopt digital tools and build a more future-ready workforce, according to the Apna MSME Hiring Pulse 2026 report.

It added that hiring growth remained broad-based, driven by both new businesses entering the recruitment ecosystem and existing employers scaling up their workforce requirements.

"At the same time, demand for jobs requiring AI-related skills grew by 164% in FY26, signalling that MSMEs are increasingly investing in digital capabilities as they scale their businesses," it added. 

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Additionally, India's workforce is becoming more geographically dispersed, with nearly two-thirds of MSME job demand still concentrated in Tier-1 city clusters (68% in FY26), workforce participation is increasingly expanding beyond metropolitan markets.

"Tier-2 cities accounted for 30% of all applicants in FY26, signalling the growing contribution of non-metro talent to India's formal workforce," it added.

Further, it noted that Tier-3 markets are emerging as a major opportunity, accounting for nearly 20% of active users but only 5% of job applications, indicating strong interest in the workforce that has not yet fully converted into formal employment.

Currently, India is witnessing new hiring hubs including Surat, Rajkot, Nagpur and Raipur which are gaining traction alongside established centres like Ahmedabad, Pune, Chennai and Delhi, indicating the widening reach of India's MSME-driven economy.

As MSME businesses scale, their hiring mix is also shifting with changing priorities. Sales & Business Development made up 40 per cent of total skills demanded by MSMEs in FY26, up from 36 per cent in FY25, making it the largest segment of skill demand.

Overall hiring continued to focus on general, transferable skills, highlighting the ongoing need for customer-facing and business roles that can be used across sectors.

The most in-demand roles included Telesales, Accounting & Taxation, Field Sales and Customer Support reflecting sustained demand for frontline and operational talent as businesses continue to expand.