MSME sector sees 164% surge in AI skill demand; workforce turns geographically dispersed: Report
New Delhi, June 25
India's workforce is becoming more geographically scattered, with demand for AI-related skills rising sharply by 164% in FY26 within the MSME sector, according to the Apna MSME Hiring Pulse 2026 report.
The report notes that Indian MSMEs are changing their hiring patterns as they expand, adopt digital tools and build a more future-ready workforce. 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.
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.
The report noted Tier-3 markets are emerging as a major opportunity, accounting for nearly 20 per cent of active users but only 5 per cent of job applications, indicating strong interest in the workforce that has not yet fully converted into formal employment.
Furthermore, 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.
— ANI
Reader Comments
Good to see AI skills becoming mainstream in MSMEs. The geographic dispersion is encouraging—smaller towns are finally getting a share of the formal workforce. But 68% demand still in Tier-1 shows the disparity remains high. Need more skilling centers in these emerging hubs to sustain this momentum.
Sales & Business Development making up 40% of skill demand—no surprise there! Most MSMEs are still chasing revenue over deep tech adoption. But that 164% AI skill growth is promising. Hope our educational institutes in Tier-2/3 cities start offering relevant courses, otherwise we'll miss the bus.
Respectfully, I have mixed feelings. The AI demand surge is great but what about the quality of hiring? Telesales and Customer Support are still the top roles—these are low-skill, high-attrition jobs. Tier-3 markets with 20% active users but only 5% applications shows the gap between interest and opportunity. Need better infrastructure first.
This is the kind of growth we need to see! 🇮🇳 Tier-2 cities finally getting recognition for their talent pool. As someone from Nagpur, I'm thrilled to see it mentioned as an emerging hub. But the government needs to ensure digital infrastructure in these smaller cities keeps pace with demand. 5G and reliable internet are non-negotiable for this AI push.
Interesting report but where's the data on wage growth? MSMEs hiring more is good, but if salaries in Tier-2/3 cities are still far below metro levels
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