A mass unemployment crisis is looming in India that we must confront soon.
India's IT-BPM industry remains one of the largest formal employers and has driven India's upward mobility over the last 30 years. But this sector, globally dominated by Indian companies, is being disrupted by AI agents.
When asked which jobs AI will fully automate, Sam Altman said customer support will be the first to go. It is the largest sub-segment of global BPO spends and employs about 1.3 million in India, while the broader IT-BPM industry employs 5-6 million. This accounts for ~10% of India's GDP and significantly contributes to foreign exchange earnings.
Young graduates starting their careers in BPO will face fewer entry-level opportunities. Just the top 5 companies listed below employ 1.7 million people in India. Common BPO tasks like call centre operations, data processing, financial reconciliation, IT management, and HR outsourcing are highly automatable.
With fewer entry-level roles, ten million annual graduates will struggle to find gainful employment. If the current trend continues, the gig economy could employ twice as many as the IT-BPM sector by 2028. Manufacturing isn't growing fast enough to absorb this workforce. The economies of Bengaluru, Chennai, Hyderabad, and Pune, reliant on IT services, will face pressure.
The bright side is that India's IT services industry has always been smart in adapting to changing trends. This time is no different. They're leveraging their global presence to pivot to AI-driven services, helping large clients deploy AI for complex challenges across sectors.
But what's clear is that incremental job creation will slow as AI forces them to focus on revenue per employee rather than growing headcount. The door is closing on the biggest gateway for India's middle-class aspirations and we must act now.