Opinion | PM Internship Scheme: The Right Recipe For The AI Age

Opinion | PM Internship Scheme: The Right Recipe For The AI Age

India's major IT services companies are at a crossroads. Long a springboard for engineering graduates, traditional IT giants absorbed waves of freshers into entry-level roles—coding, customer support, and app maintenance—providing a clear path from novice to expert. However, Artificial Intelligence (AI) and automation are now fundamentally reshaping this landscape, challenging established norms of early career progression and the sustainability of the talent pipeline.

A recent EY-CII report which surveyed 200 Indian enterprises found that we are moving towards a diamond-shaped workforce: mid-level and specialist roles are expanding, but entry-level hiring is contracting sharply, with a 20-25 percent decline. For India's 1.3 million engineering graduates, the class of 2026 faces choppy waters. The top five hiring companies are expected to recruit far fewer college students compared to over three-digit numbers per company over two years ago.

AI systems now perform many tasks that once defined junior roles, such as writing code, analysing data, and drafting standard documents. Approximately 64 per cent companies in the EY-CII survey report that AI is being utilised for routine and repetitive tasks. This directly affects the traditional apprenticeship model, which relied on juniors performing “grunt work" in exchange for training and knowledge from experienced professionals. India's hiring managers are already cognizant of a shift towards a disappearing “apprenticeship layer".

On the flipside, Indian enterprises face another challenge. While enterprises have rapidly adopted AI to automate tasks, significant AI skills gap persists with only one in three employees expressing confidence in their AI skills. This gap is expected to widen: India's AI talent demand is projected to grow from 600,000-650,000 to more than 1,250,000 between 2022-27, according to a Deloitte-NASSCOM report. This presents a dilemma: how do we train the next generation of leaders and AI-skilled professionals when the career pipeline is shrinking and entry-level opportunities are diminishing?

Professors Luis Garicano of the London School of Economics and Luis Rayo of the Kellogg School of Management, in their influential paper “Training in the Age of AI: A Theory of Apprenticeship Viability", highlight this tension. Their model outlines a race between AI's ability to substitute entry-level work (“raising the Floor") and its capacity to augment expert-level productivity (“raising the Top"). The key factor is the ratio of the floor to the top—defined as the “Expertise Leverage Ratio"—which determines the viability of the apprenticeship model. If this ratio falls below a certain threshold, experts—even with AI skills—do not possess enough saleable knowledge to justify hiring apprentices, and it's no longer viable to use company revenues to support entry-level workers. If the gap between what an AI-empowered expert can achieve and what AI alone can do is small, companies may bypass juniors entirely, relying on automation for entry-level work. The career ladder risks collapse thereby threatening long-term workforce sustainability.

Could the Indian market already be in the middle of such a collapse? The workforce is moving to a diamond-shaped pattern and entry-level opportunities are drying up as AI automates work. At the same time, companies have rushed to invest in AI at work and fast-track everyday tasks, while AI skills gap exists and threatens widen in the near future.

We argue that the PM Internship Scheme, which incentivises companies to recruit interns in roles akin to apprenticeships, directly responds to this challenge. It keeps the career ladder accessible for young talent even as firms integrate AI, ensuring sustainable growth pathways despite rising automation. The scheme, launched in 2024, offers 12-month internships to one crore young people at India's top 500 companies and provides attractive government-backed stipends to incentivise firms to hire long duration interns.

By targeting 21–24-year-old graduates who have yet to secure their first roles, the scheme resembles traditional apprenticeships. Recent reports indicate that in today's AI-driven employment landscape, the apprenticeship model will be the way forward. Multinational companies are increasingly utilising apprenticeships to identify high-potential individuals, given the cost-effective and flexible nature of these programmes. This enables firms to reduce hiring risks, tap talent in tier-2 and tier-3 cities, and allows seniors to offer hands-on training, targeted development, and nurture future leaders aligned with organisational goals.

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Consequently, success in the AI era will depend on balancing the efficiencies brought by AI with continued investment in human potential—building a resilient workforce and India's next generation of innovators, and leaders. The PM Internship Scheme stands as a timely solution, equipping India's youth with practical skills and industry exposure to thrive in an AI-driven future, while maintaining a robust and resilient talent pipeline.

Anuj Gupta and Aarshi Tirkey are the India Managing Director and Senior Analyst respectively at BowerGroupAsia, a policy consulting firm. Views expressed in the above piece are personal and solely those of the writer. They do not necessarily reflect News18's views.

Source: News18
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