[Edaily Reporter Bang Sung Hoon ] India’s information technology (IT) services industry is being displaced by artificial intelligence (AI). While the industry has long served as the “backyard” of the global IT sector, relying on its pool of inexpensive and skilled English-speaking workers, AI is now beginning to replace human labor.

According to the Financial Times (FT) on the 11th (local time), India’s IT services industry employs 6 million people and accounts for about 7% of the country’s gross domestic product (GDP). With annual revenue exceeding $300 billion (approximately 424 trillion won), it is the largest source of jobs in the private sector. However, the growth formula that has held steady for over 30 years is now faltering. This is because generative AI is now capable of handling a significant portion of the routine tasks that have long underpinned the industry. Analysts predict the impact will be particularly severe, given that four out of every ten young Indian college graduates (under 25) are currently unemployed.

◇Finding New Jobs at a Quarter of the Salary… “Traditional IT Jobs Are Dead”
Rakesh, a 45-year-old former Oracle employee in Bengaluru, was awakened one morning last March by calls from his colleagues. When he checked his email, he found a layoff notice. According to the All India IT Workers’ Union, approximately 10,000 people lost their jobs that day along with him. Fearing it might hinder his job search, he declined to reveal his full name.

What left him feeling even more disheartened was the work he had been doing right up until his layoff: building tools using AI technology. “The tools we built with blood, sweat, and tears are the ones that drove us out,” he said. “We gave our all, but the company didn’t stand by us.” Oracle did not respond to inquiries from the FT.

He applied to hundreds of companies but only made it past the initial screening at two; he eventually joined another firm. His monthly salary is 75,000 rupees (about 1.11 million won), a quarter of what he earned at Oracle. He has used his severance pay to pay off debts and now relies on his wife’s salary as a teacher. Still, he said he considers himself lucky. He noted that there are plenty of former colleagues who have been unable to find work for months. “Traditional IT jobs in India are completely dead,” he stated bluntly.

◇The Direct Correlation Between Revenue and Workforce Has Been Broken
The industry, which had been expanding for years, is already cutting its workforce. According to credit rating agency S&P, Infosys and Wipro had reduced their workforces by 5–6% as of March this year compared to 2023. A similar trend was observed at Tata Consultancy Services (TCS) and Tech Mahindra. The Nifty IT Index, which tracks major Indian IT companies, has fallen 18% so far this year, underperforming the benchmark Nifty 50 index.

The conventional wisdom—that more customers mean more work, and more work means hiring more engineers—is breaking down. Sandip Kala, CEO of Persistent Systems, said, “The direct correlation between revenue and headcount will definitely be broken,” adding, “With AI, you can do more work with fewer people.”

In a report last month, S&P projected that revenue growth for Infosys, HCL Tech, and Wipro would slow to 2–4% over the next two fiscal years. This is lower than the 4–6% growth recorded in the previous fiscal year. S&P described AI as a “double-edged sword” for these companies, noting that while it threatens traditional business models—much like robots replacing factory workers—new opportunities will emerge if companies pivot toward operating, training, and maintaining those robots.

N. Chandrasekaran, Chairman of TCS, India’s largest IT firm, stated last June that AI agents could take over half of the company’s technical roles within three years, adding, “We won’t be hiring as many people as we used to.”

The industry argues that AI does not eliminate roles but rather transforms them. The logic is that, because technology is changing so rapidly, the demand for people to integrate it into complex corporate environments is actually increasing. Arti Subramanian, Chief Operating Officer (COO) of TCS, explained to analysts last month that a major role of the company is to help customers choose which technologies to adopt.

◇40% of Young College Graduates Are Unemployed
The reality is grim. According to recruitment consulting firm Xpeno, job postings in India’s IT sector totaled approximately 93,000 in June—a 14% decrease from the previous month and a 17% drop from a year ago. This marks the lowest level in 28 months. A survey by Azim Premji University found that nearly 40% of college graduates under the age of 25 were unable to find employment.

Prime Minister Narendra Modi has publicly declared that AI will create millions of new jobs this year. However, V. Ananta Nageswaran, the government’s chief economic advisor, warned that companies that once relied on India’s strengths to outsource work may no longer need to do so, and that if India is slow to adapt, its core competitiveness could become a hollow shell. D.K. Sivakumar, Chief Minister of Karnataka—the state where Bengaluru is located—predicted last April that jobs in Bengaluru and other regions could be cut by as much as half.

Frustration over a lack of opportunities has already spilled onto the streets. Last month, tens of thousands of young Indians protested against corruption in the education system and a lack of opportunities. These scenes make the label of “the world’s fastest-growing major economy” seem hollow.