Signs of the future: India must prepare to deal with AI adoption

The announcement by Tata Consultancy Services (TCS), India’s largest information-technology (IT) services company, on Sunday that it would lay off about 2 per cent of its global workforce from middle and senior levels is a clear sign of how corporations, particularly in IT, are responding to shifts in the business environment. The decision will result in the technology behemoth laying off more than 12,000 people from its workforce of more than 600,000. The company, in its statement, said it was in the process of becoming a future-ready organisation. This will include investing in areas of new technology and deploying artificial intelligence (AI) at scale, both for its clients and itself, among other things. Although this may also partly be a result of a challenging business environment, the move is being interpreted by analysts as a structural shift driven by AI. 

To be sure, several large technology companies, such as Microsoft, IBM, and Intel, have announced plans to cut their workforce to varying extents, and the trend is unmistakable. The fast-changing technology landscape, with the growth and adoption of AI, is making not only tech firms but businesses across the spectrum adapt. In this context, the TCS management must be commended that it is preparing for the future and is willing to take hard decisions to remain relevant in this fast-changing environment. Only organisations willing to adapt to the changing technological and business environment will be in a position to add value, create employment, and contribute to growth over the long run. It is also worth noting that, besides technological changes, the global business environment is not conducive. The uncertainty emanating from the policies adopted by the United States is particularly affecting investment across the globe. 

Nevertheless, AI is changing businesses in profound ways and also posing policy challenges for a country like India, which needs to create employment at scale. For instance, a top executive of one of the big tech companies told this newspaper recently that the person’s firm was approaching a point where a single model would assist several cognitive tasks that only humans could do. Once such models are adopted by businesses, they will begin replacing humans on a much bigger scale. In terms of outcome, the adoption of AI or automation in general will further tilt the balance in favour of capital over labour. Although this has been happening in various sectors over time, the scale might increase rapidly in the near to medium term. Thus, the big question is how policy should respond in a country like India. Unfortunately, there are no easy answers. Policy cannot stop firms from adopting technology because it will be critical for them to remain competitive. However, it will lead to lower demand for human labour. 

There will certainly be a need for talent to manage and handle AI programs. India could perhaps benefit by reorienting its large tech workforce in these areas. Training in top engineering institutes might also need to be adapted. Adoption of technology could also result in different kinds of work being shifted to India. Admittedly, all these are just possibilities, and nothing can be said for sure. What is needed at this stage is a wider policy debate on how India can capitalise on its demography in an environment of trade factionalism and increasing possibilities of rapid labour replacement by technology.