India’s outsourcers are not dead yet, no matter how many hot takes said ChatGPT would eat their lunch.
Tata Consultancy Services, chief executive K Krithivasan, brushed off fears that AI will smash the $300bn outsourcing industry and trigger mass job cuts, as demand looks steadier.
Tata Consultancy Services shed nearly 30,000 staff, or five per cent of its workforce, through layoffs and voluntary exits in the past two quarters, but Krithivasan does not expect more large-scale cuts.
“There will always be some segment within some small pockets within the company that will not fit in the scheme of things. AI is not going to create layoffs by itself.”
He said TCS’s AI services are gaining traction as clients integrate and adopt the tech, lifting productivity and giving them more headroom to sign extra deals.
The sector’s future looked shaky once AI models started automating work that outsourcers made a living from, including customer support, data management and software development.
Even so, the big Indian firms are leaning into AI toolchains to offset slower sales in the US and Europe, their biggest markets.
Motilal Oswal Financial Services, sector analyst Abhishek Pathak, said the firms are managing the threat by partnering with OpenAI and Anthropic to build tailored models and chatbots for clients.
Pathak said they were “willing to cannibalise a bit of their revenues in order to thrive in the next phase of services. Not everything is rosy in the direction of travel from here.”
