India’s information-technology (IT) services industry is likely to undergo a significant workforce transition because of artificial intelligence (AI), but fears of widespread job losses are premature, according to Neelkanth Mishra, member, Economic Advisory Council to the Prime Minister.
Mishra said the industry should be viewed holistically by combining traditional IT services companies with global capability centres (GCCs).
He noted that India’s services exports grew 15 per cent in dollar terms in April and had been expanding faster than the country’s gross domestic product (GDP).
Mishra was talking to the media at the launch of the Internet and Mobile Association of India’s AI Council of India in Mumbai.
“The organisational boundary itself may be shifting because of AI,” Mishra said, explaining that some work previously outsourced to IT services firms was increasingly being brought in-house.
He acknowledged that AI posed significant transition challenges for the sector, particularly around reskilling. Companies will need fewer people focused purely on coding and more employees skilled in areas such as design, user interface, and user experience, he said.
Most layoffs so far have been concentrated in software companies because labour is their largest cost and software development is increasingly being automated, he said.
However, he argued that lower costs of software development could also increase the volume of software being built, invoking the “Jevons paradox”, where lower costs drive higher consumption.
“There is a lot of restructuring and strategic shifts that firms need to undertake,” he said.
In a fireside chat with Sharad Sanghi, founder and chief executive officer of Neysa, Mishra addressed the constraints and opportunities for making India a leading country in AI.
India must prioritise building a merit-based research ecosystem and deepen risk capital if it wants to emerge as a global leader in AI, while simultaneously developing domestic capabilities across the AI value chain, said Mishra.
Capital and talent remain India’s biggest constraints, with capital being the more immediate challenge, according to him.
According to Mishra, India must also encourage experienced Indian-origin professionals working overseas to return and build technology companies at home while creating many more deep-tech startups through universities and research institutes.
“We need companies where the intellectual property is owned and controlled from India. When we talk about India’s leadership in AI, the opportunity is not just to consume AI but to build products for India and for the world.” Business Standard
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