Threat or opportunity: India needs to be prepared for AI-driven changes

As artificial intelligence (AI) makes inroads, Microsoft founder Bill Gates believes that employment opportunities in only three sectors are likely to remain robust in the face of the AI onslaught. A recent study by Bloomberg Intelligence indicates that jobs in banking and finance are among the most vulnerable to AI induction. This is in line with a report by Citi in June, which estimated AI is likely to displace more jobs across the banking industry than in any other sector. It estimated 54 per cent of jobs in banking had a high potential to be automated. Recent trends in software also indicate that a lot of jobs in that sector may be at risk. Mr Gates believes that energy, biosciences, and AI system development are three sectors that require expertise and adaptability that AI cannot easily replicate. More broadly, Mr Gates thinks in the future humans will only be deployed in roles that require creativity and critical thinking. Digital literacy and programming skills will be critical across industries. Thus, it will be crucial to rework educational systems to ensure populations acquire those skillsets as early as possible.

 

The Bloomberg study surveyed chief technology officers (CTOs) in the finance domain. The conclusions are, a net 3 per cent cut in workforce is likely over the next three-five years with many CTOs expecting more drastic reductions. Nearly a quarter of the 93 respondents predict a steeper decline of between 5 per cent and 10 per cent of the total headcount. The companies surveyed included giants like Citigroup, JPMorgan Chase, and Goldman Sachs. This could amount to around 200,000 jobs being lost or rather eliminated as AI takes over tasks currently carried out by humans. Back office, middle office, and operations are likely to be most at risk. Financial entities could see margin gains as efficiency improves and they believe AI may drive revenue gains as well. In 2027, banks could see pre-tax profits 12-17 per cent higher than they would otherwise have seen because AI may increase productivity. This could add as much as $180 billion to the combined bottom line of the respondents of the survey even as they shed employees.

 

Many people believe that new roles would develop for humans even as AI eliminates many routine roles. As of now, there are some signs that this is happening in finance but this is still a very nascent phenomenon. The software industry is unsurprisingly front and centre in this phase of change. Salesforce, for example, says it isn’t hiring coders in 2025. It doesn’t need to because AI has driven huge productivity gains and the customer focus has shifted to Agentforce, an AI-driven product. As AI makes coding easier, other software firms also believe that the “antfarm” model will gradually go extinct. However, most believe that new, more creative roles centred on the new algorithms will drive the next phase of growth for the software industry. India’s large tech sector and digital ecosystem is, therefore, confronted with both a threat and an opportunity. The bulk of the information-technology services are likely to become completely AI-driven, and this could be followed by redundancies at the low end of the programming functions where the bulk of the entry-level engineers are currently employed. But creativity and adaptation will receive a big push as AI opens new pathways and that could boost activity across many sectors as this process of creative disruption continues. Policymakers must take note of the trends and support the transition. It must be ensured that the educational system is rebooted to prepare the next generation.