This study delves into the impact of Artificial Intelligence (AI) integration on employee performance and talent management within Southern India’s dynamic IT sector. Through the utilization of semi-structured interviews across nine industries, this research unravels the multifaceted effects stemming from the adoption of AI. It navigates through various concerns such as information security, data privacy, and job stability, while also shedding light on the advantages brought forth, including heightened work flexibility and enhanced job efficacy. Noteworthy among the challenges encountered is the emergence of technostress, driven by factors such as work overload and cognitive complexity. The study underscores the pressing need for strategic human resource development to address the evolving landscape of job roles and skill requirements in the wake of AI integration. It advocates for the cultivation of socio-technical competencies among employees to adeptly navigate the repercussions of AI integration. By elucidating the dynamic interplay between AI adoption, employee experiences, and talent management practices, this study offers invaluable insights into the evolving paradigm of Southern India’s IT industry. It serves as a foundation for implementing informed strategies aimed at optimizing employee performance and talent management amidst the transformative influence of AI.