Will Chatbots Eat India's IT Industry?

Economist: What is the ideal job to outsource to AI? Today's AIs, in particular the Chatgpt-like generative sort, have a leaky memory, cannot handle physical objects and are worse than humans at interacting with humans. Where they excel is in manipulating numbers and symbols, especially within well-defined tasks such as writing bits of computer code. This happens to be the forte of giant existing outsourcing businesses -- India's information-technology companies. Seven of them, including the two biggest, Tata Consultancy Services (TCS) and Infosys, collectively laid off 75,000 employees last year. The firms say this reduction, equivalent to about 4% of their combined workforce, has nothing to do with ai and reflects the broader slowdown in the tech sector. In reality, they say, ai is an opportunity, not a threat. Business services are critical to India's economy. The sector employs 5m people, or less than 1% of Indian workers, but contributes 7% of GDP and nearly a quarter of total exports. Simple services such as call centres account for a fifth of those foreign revenues. Three-fifths are generated by it services such as moving data to the computing cloud. The rest comes from sophisticated processes tailored for individual clients. Capital Economics, a research firm, calculates that an extreme case, in which ai wiped out the industry entirely and the resources were not reallocated, would knock nearly one percentage point off annual GDP growth over the next decade in India. In a likelier scenario of "a slow demise," the country would grow 0.3-0.4 percentage points less fast. The simplest jobs are the most vulnerable. Data from Upwork, a freelancing platform, shows that earnings for uncomplicated writing tasks like copy-editing fell by 5% between Chatgpt's launch in November 2022 and April 2023, relative to roles less affected by ai. In the year after Dall-e 2, an image-creation model, was launched in April 2022, wages for jobs like graphic design fell by 7-14%. Some companies are using AI to deal with simple customer-service requests and repetitive data-processing tasks. In April K. Krithivasan, chief executive of TCS, predicted that "maybe a year or so down the line" chatbots could do much of the work of a call-centre employee. In time, he mused, AI could foretell gripes and alleviate them before a customer ever picks up the phone.

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