India Warily Eyes AI
Technology outsourcing has been India’s only reliable job creator in the past 30 years. Now artificial intelligence threatens to wipe out those gains.
Two days after K.S. Sunil Kumar received a promotion, Human Resources phoned him up and asked him to resign.
This happened in April, just as Kumar was beginning his ninth year at Tech Mahindra, one of the giants in India’s IT services industry. He worked in engineering services, where he designed components and tools for aerospace firms in North America and Europe. They’d send over specs—the materials available to construct a hinge, and the kind of load it had to bear, and the cost at which it had to be manufactured—and he mocked up options with the help of software. He was a foot soldier in the army of Indian engineers to whom work is outsourced from the West, so that it can be finished at a fraction of the expense. Sometimes he left his base, Tech Mahindra’s Bangalore campus, to serve stints at clients’ offices abroad: in Montreal, Belfast, or Stockholm.
When his employment was terminated, Kumar was earning close to $17,000 annually, a nice middle-class salary in India. Around the same time, Tech Mahindra announced profits for the previous financial year of $419 million, on revenue of $4.35 billion. (Tech Mahindra did not respond to a request for comment for this story.) IT services and related offerings in India record annual revenue of $154 billion and employ nearly four million people. The sector’s vigor has relied upon its ability to shave costs lower and lower—upon its ability to arbitrage the cheaply bought skills of workers like Sunil Kumar.
…When Kumar lost his job, he became part of a wave of layoffs washing through the Indian IT industry—a term that includes, in its vastness, call centers, engineering services, business process outsourcing firms, and infrastructure management and software companies. The recent layoffs are part of the industry’s most significant period of churn since it began to boom two decades ago. Companies don’t necessarily attribute these layoffs directly to automation, but at the same time, they constantly identify automation as the spark for huge changes in the industry.
The size and prestige of India’s IT industry are reflected in the design of Infosys campuses in places such as Bangalore (above).
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