As technological innovation leads in today’s digital economy, the adoption of Artificial Intelligence in Human capital management seems to be proliferating owing to its contribution towards business growth. The main purpose of the research is to examine how AI-powered HCM functions influence employee engagement in the IT sector, especially in Chennai. The study adopted a descriptive approach and analysed the effect of an automated onboarding system, workforce development, performance and reward management and employee wellness towards employee engagement. Based on the findings, it is revealed that the application of artificial intelligence facilitates human capital development at the workplace which in turn reflects on employee satisfaction and employee engagement. Employee engagement is a key element of organisational success. Eventually, it is concluded that effective integration of technology into business operations enables better organisational performance and development by enhancing human capabilities.