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[Global Times Special Correspondent Wang Yi] According to a recent report by the Wall Street Journal, artificial intelligence (AI) is disrupting India's technology outsourcing industry and may lead to a large number of job losses. According to data from the Indian Software and Services Industry Association, in the past year ending in March, India's technology outsourcing industry added only 60,000 new jobs, the lowest annual increase in more than a decade. The total number of employees of India's three largest technology companies (Tata Consultancy Services, Infosys and Wipro) decreased by more than 60,000 during the same period.

It is reported that India's technology outsourcing industry currently has 5.4 million employees, with a business scale of US$250 billion, accounting for about 8% of India's economy. HSBC said that more than 80% of companies in the S&P 500 index outsource part of their business to India. Therefore, AI not only affects the technology outsourcing business, but also affects the Indian economy.

"AI may accelerate the trend of declining labor intensity in the technology outsourcing industry." The report said that about 10 years ago, a company needed 27 employees to achieve an annual revenue of $1 million, but now only 21 employees are needed. In the past, companies usually charged customers based on the number of employees involved in the project, but now the fees are mostly linked only to the delivery results. "Global demand for manpower will decrease, and India's share of this downward trend is unclear, but I am a little pessimistic." Daniel Lee, a professor at the MIT Sloan School of Management, said. However, many Indian industry executives are optimistic that AI will eliminate some old businesses and create new businesses at the same time.

India's technology outsourcing industry attributes the current slowdown to over-hiring during the pandemic, rather than artificial intelligence and automation. During the pandemic, the industry added 450,000 jobs in a year. Even so, Harik, chief technology officer of Tata Consultancy Services, said: "Future positions will require higher levels of critical thinking, design, strategic goal setting, and creative problem-solving."

For these technology outsourcing companies, upgrading skills has always been a major issue as they pursue processes and products that can bring higher profits. Industry leaders are realizing that low-end outsourcing businesses such as call centers are bound to decline eventually, even if this process may take longer than expected.

Another challenge for India's technology outsourcing industry is that the country has a large gap in digital talent. It is estimated that less than 20% of India's 1.5 million engineering students enter the industry. The Indian Software and Services Industry Association predicts that the gap between digital talent supply and demand will expand from 25% in 2023 to 28%-29% in 2028.

The association said that the Indian technology industry needs to retrain more than half of its current employees to meet the demand for AI and other advanced skills in the next 2-3 years. Large companies have begun training their employees in AI. For example, Tata Consultancy Services has launched an internal AI training program to meet the needs of its more than 200 ongoing AI projects. Infosys and Wipro have also invested in large AI training programs.