IN Gurugram, the sprawling tech suburb outside New Delhi, Krishna Khandelwal is using artificial intelligence to build an army of chatbots designed to eliminate the kind of jobs that once lifted India into the ranks of the world’s fastest-growing economies.
Since last summer, his startup, Hunar.AI, has offered companies bespoke AI voice agents that steer job applicants through virtually every step of the hiring process, from resume screening to orientation.
“For onboarding,” he said in an interview in the company’s headquarters in a shared workspace, “you don’t need humans at all.”
For a quarter century, India has made itself the world’s back office, providing an educated, English-speaking workforce to do tasks more cheaply than in the United States or Europe.
The industry today employs more than six million people and is worth nearly US$300bil, more than 7% of the country’s gross domestic product.
Now, AI threatens to do to India what its outsourcing model did to the rest of the world: replace hundreds of thousands of office workers.
Economies everywhere are bracing for an era in which AI tools automate entire categories of white-collar work, but the brunt could fall hardest on India, undermining two decades of effort to climb the value chain and establish a place in the global tech world.
“It’s a matter of time,” said Deedy Das, a partner at Menlo Ventures, an investment firm that closely tracks AI.
“Markets are pretty efficient. If a tool exists that does a job cheaper, it will be adopted,” he said.
“I’m surprised it hasn’t happened at a faster clip, but it will.”
The tremors are already being felt.
Tata Consultancy Services, one of India’s largest employers, has shrunk its workforce to 580,000, a decline of more than 20,000 from a peak in 2022, when it hired 100,000 new workers in one year alone.
Its main rival, Infosys, has also slowed hiring, while dozens of smaller startups laid off workers across the country in 2025, according to Inc42, a digital economy news outlet in India.
Graduates of the country’s universities and technical colleges are finding fewer openings, forcing them to scramble to “upskill”, an increasingly popular term in the context of learning the AI technology that is reshaping the industry.
Tech stocks in India were already slumping this year, but a speculative report on Feb 22 by Citrini Research, an analytics company based in the United States, sent them spiralling, by painting a doomsday scenario about AI’s impact on India in particular.
“The entire model was built on one value proposition: Indian developers cost a fraction of their American counterparts,” the report said, imagining the world in the not-so-distant future of 2028. “But the marginal cost of an AI coding agent has collapsed to, essentially, the cost of electricity.”
Narendra Modi, India’s prime minister since 2014, has recognised the challenge.
Like many leaders, he has pledged to make the country an AI power, including by overseeing international deals and urging the country’s own software engineers to develop new technologies and export them to the world.
“There have been certain turning points that have shaped entire countries,” Modi said during an international conference on AI in New Delhi last month, according to a translation of his remarks.
“These turning points set the direction of civilisation and transform the pace of development. Artificial intelligence is one such transformation in history.”
It is far from clear, however, whether India is positioned to make that transformation.
While it has a highly educated workforce, it lacks the infrastructure and natural resources needed to power AI products.
At the AI conference in New Delhi, India’s largest outsourcing firms announced deals with US companies including Anthropic and OpenAI to expand use of their products and to develop data centre capacity to power them.
The announcements, while welcomed as foreign investment in the economy, underscored how reliant the country remains on the United States for everything from the microchips to the foundational models that are driving the AI boom.
Upheaval in the economy could undermine political support for Modi’s government, whose party lost seats in the last parliamentary elections in 2024.
The country already faces labour unrest that further job losses could worsen. Unemployment among educated young people reached as high as 65% of the total unemployed in 2022, according to a report by the International Labour Organisation.
While six million tech workers might not seem like a lot in a population of nearly 1.5 billion, they represent a politically vocal middle class concentrated in some of the country’s most dynamic cities, including Bengaluru, Hyderabad and Pune.
“If you’re a young engineer getting out of university, I’d be worried,” said Rajesh Nambiar, president of Nasscom, the tech industry association founded in 1988, when India’s tech boom was in its infancy. “It’s not going to be pretty out there.”
Nambiar and other industry leaders and experts are not exclusively gloomy. They point out that AI is already driving local startups in India that aspire to build products for global markets.
“This is the best place to be,” said Nikhil Gupta, a founder of LimeChat, an e-commerce company in Bengaluru.
LimeChat designs chatbots for retailers on WhatsApp, the Meta-owned messaging app, which has more users in India than anywhere in the world.
Gupta grew up in Cupertino, California, in the heart of Silicon Valley, but returned to India for high school and college and decided to build his startup there.
India, he said, “has all the ingredients already to provide services for the world”.
For India’s outsourcing giants, deep relationships with multinationals and the ability to manage sprawling software systems mean that they will not disappear overnight.
They have already expanded beyond call centres, offering services such as human resources and accounting.
In recent years, hundreds of international companies, many of them American, have opened their own operations in India, known as global capability centres, rather than simply contracting out the work.
K. Krithivasan, the CEO of Tata Consultancy Services, said the company planned to remake itself as an AI powerhouse.
On an earnings call in January, he said revenues for the company’s AI services had swelled in the past quarter to US$1.8bil, on an annualised basis.
“We remain steadfast in our ambition to become the world’s largest AI-led technology services company,” he told investors.
On the ground, however, the prospects seem grim.
In call centres and back-office operations, hiring has slowed to a crawl.
AI is creating new kinds of jobs – including training AI chatbots by labelling data and teaching robots tasks like folding clothes – but the jobs are repetitive, poorly paid and offer few paths upward.
At the RD Engineering College in Ghaziabad, a gritty industrial city with an estimated 2.5 million people east of New Delhi, tech companies such as Tata and Infosys once came calling in search of recruits. Now the college has to seek the companies out, according to Mohd Vakil, the dean of academics.
Only a few years ago, 85% of graduates, on average, had jobs when they finished, Vakil said. In the past two years, it was 75%. With fewer companies hiring, competition has become fierce.
During the semester break in January, Complygate, a background-check company based in Birmingham, England, held a 10-day training course on campus for nearly 100 students.
The course ended with a test. Only the top scorers – roughly 10 – received job offers.
“AI has changed the business model,” said one student, Tathagat, 23, who goes by one name.
A native of Bihar, a state bordering Nepal, Tathagat said the onus was on students to learn the skills that this new model demanded.
“It depends on us,” he said. “If you adapt with the times, it’s a great time to graduate.” — ©2026 The New York Times Company
This article originally appeared in The New York Times
Already a subscriber? Log in
Get 20% OFF The Star Digital Access
Cancel anytime. Ad-free. Unlimited access with perks.
