The rapid rise of artificial intelligence (AI) is set to revolutionize India’s information technology (IT) outsourcing sector, a significant player in the country’s economy.
As outsourcing giants begin to adopt AI into their operations, concerns are growing over the potential loss of millions of jobs, particularly in lower-end operations such as call centers.
The changes signal a significant transformation in an industry that has long been a global leader, raising questions about the future of the workforce and the broader economic impact.
A surge in AI adoption across India
As reported by The Times of India, a study by Kantar has highlighted a dramatic increase in AI adoption across India, underscoring the extent to which smart technologies are becoming integral to everyday life.
The study reveals that 724 million Indians are engaged with AI in some form, a figure set to grow by 6% annually. This widespread adoption includes various AI-driven activities, from home automation and virtual assistance to personalized recommendations and image filters, making AI nearly ubiquitous among internet users nationwide.
Kantar’s study also forecasts staggering growth in the global generative AI market, which is projected to reach $1.3 trillion by 2034. The anticipated compound annual growth rate (CAGR) of 42% over the next decade underscores the immense potential of AI technologies to reshape industries worldwide.
AI’s looming impact on India’s outsourcing sector
Despite the opportunities, the increasing adoption of AI poses significant challenges to India’s $250 billion outsourcing industry, which employs approximately 5.4 million people.
As reported by The Wall Street Journal, tech-industry body Nasscom revealed that the outsourcing sector contributes around 8% of the nation’s economy.
But AI technologies threaten to disrupt these operations, particularly in business process outsourcing (BPO) segments that involve routine, repetitive tasks.
Many of India’s outsourcing firms are already deploying AI across various aspects of their operations, recognizing the need to stay competitive in a rapidly evolving market.
However, these developments might not be enough to safeguard lower-end jobs as AI increasingly takes over tasks traditionally handled by human workers.
This shift can have far-reaching implications for the millions employed in these roles and the larger economy.
A global uproar beyond India
The implications of AI are not confined to India. The outsourcing boom that created the “getting Bangalore-d” trend in the U.S., where American jobs were given to more cost-effective talent, now faces a new challenge.
AI’s ability to perform tasks with greater efficiency and lower costs can upset global businesses, not just those in India.
With more than 80% of companies in the Standard and Poor’s 500 (S&P 500) outsourcing some jobs to India, the ripple effects of this disruption can be felt worldwide.
As AI continues to advance, the industry must navigate the delicate balance between innovation and employment so that the benefits of AI do not come at the cost of livelihoods.
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Kilicarslan, M. (2024, August 12). The AI Revolution: India’s Tech Hub. LinkedIn. Retrieved from https://www.linkedin.com/pulse/ai-revolution-indias-tech-hub-mesut-kilicarslan-mt8bf/
Tandon, S. (2024, April 25). AI: A daily companion—study highlights increasing adoption among Indians. Mint. Retrieved from https://www.livemint.com/ai/artificial-intelligence/ai-a-daily-companion-study-highlights-increasing-adoption-among-indians-11713936248570.html
White, K. (2023, September 12). U.S. Call Center Job Creation Declines As Nearshore & Offshore Geographies Grow. Site Selection Group. Retrieved from https://info.siteselectiongroup.com/blog/us-call-center-job-creation-declines-as-nearshore-and-offshore-geographies-grow
