Indian MSMEs see 164% surge in demand for AI-related skills: Report

Indian MSME hiring is evolving with a 164% spike in AI-related skills demand for FY26. A new report shows the workforce is becoming more geographically scattered, with Tier-2 cities contributing 30% of applicants, signaling growth beyond metros.

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.

Geographical Dispersion of India's Workforce

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.

Emergence of New Hiring Hubs

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.

Changing Skill Priorities in MSMEs

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.

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