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Services have long been the defining feature of India’s place in the global economy. Its engineers drove the software revolution, its call centres became the voice of global corporations and its IT industry made cities like Bengaluru, Hyderabad and Pune symbols of economic success. We are in the middle of a new technological transition. AI is changing industries, governments and societies. The question is whether India can take the lead once again in a global transition, this time as the world’s AI back office.
The idea looks promising. In the race to implement AI systems, companies require huge amounts of human labor behind the scenes. AI models require data that has been labeled, regulated and validated. Try experimenting with algorithms. Human review of AI-generated outputs is required. Big companies need teams to embed AI into current workflows. These jobs are increasingly being outsourced and we are seeing a growing market for services related to AI.
India seems to be in a great spot to thrive. The country already has a large English-speaking workforce, a strong IT services sector and a lot of experience in providing business process outsourcing services. Indian IT giants are aggressively expanding their AI consulting and implementation capabilities, and thousands of startups are carving out niches in the emerging AI ecosystem.
But to become the world’s back-office for AI would be both an opportunity and a challenge.
It is a play on scale, the opportunity. Unlike semiconductor manufacturing or advanced robotics, AI-related services require human capital not physical infrastructure. Data annotation, model validation, content moderation and AI operations can often be done remotely. India already has millions of graduates entering the labour force every year, many of whom have the digital skills to work in these industries.
Moreover, the worldwide demand is growing continuously. With the adoption of AI tools by companies, there is a greater need for help in training, deploying and monitoring these systems. Like the software boom, which produced a wave of Indian tech professionals, the AI transition can create new jobs in consulting, data services, cybersecurity, cloud management and algorithm auditing.
However, there is a big difference between the outsourcing wave of the 1990s and the current AI revolution.
The software sector created well paying jobs and millions of Indians could climb up the social ladder. The AI economy may not be as inclusive. A lot of the work currently associated with AI is repetitive tasks such as data labeling, content filtering and quality control. These roles are essential, but they often leave little room for career progression and are at risk of automation.
This is an important question: does India want to be a provider of cheap labour for the global AI business or a producer of AI technologies?
The distinction matters because value creation within the AI ecosystem is concentrated. The biggest financial winners are the companies that make basic models and have computing equipment and proprietary data sets. The countries only providing support services may get a small share of the long-term value of the industry.
This dilemma does not escape policymakers in India. The government’s recent efforts have focused not only on adopting AI, but also on developing skills at home. Investment in computing infrastructure, AI research, startup ecosystems and digital public infrastructure indicate a desire to move beyond old outsourcing patterns.
A country’s experience with digital public goods could be a plus. The success of Aadhaar, UPI and DigiLocker shows India’s capability to create digital systems at scale. These experiences can help shape uniquely Indian approaches to deploying AI, especially in healthcare, agriculture, education and public administration.
Geopolitics is another point in India’s favour. Governments and corporations are increasingly looking to diversify their technology ties amid rising tensions between major powers. India is frequently seen as a pretty reliable place to seek technology services, thanks to its democratic institutions, large market and growing diplomatic clout. At the same time many challenges remain.
One challenge is infrastructure. Building AI requires massive processing power, reliable electricity and data centers at scale. Indian data centre investment has grown enormously but India lags major AI powers in advanced computing capability.
Another problem is the acquisition of skills. Even with the large number of graduates India produces, many organizations still report shortages in sophisticated technological competencies. The AI economy will also need skills in machine learning, data engineering, cloud computing and cybersecurity, besides traditional software skills. It will therefore be important to increase the supply of quality technical education.
There’s also the possibility of tech reliance. If India focuses only on servicing foreign AI companies it could end up in the same place – providing labour while others collect innovation rents. The aim, in the long term, should be to move up the value chain rather than to copy the old outsourcing model.
Ultimately, the debate on India’s AI future is a proxy for a broader question about the trajectory of India’s development. The world’s AI back office jobs may create, attract investment and enhance India’s stature in the global digital economy. But think of it, not as a stop, but a start.
Countries that shape the future of artificial intelligence will not only be employers. They will create technology, develop standards and operate critical infrastructure. India has the talent and the institutional frameworks and market size to play a bigger role. Success will depend on its ability to transition from a supporter to an active driver of the AI revolution. We may need an AI back office for the world. The more relevant question is whether India should settle for being one.
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About the author:
Anusreeta Dutta is a columnist and climate researcher with experience in political research analysis. ESG research and energy policy
These pieces are being published as they have been received – they have not been edited/fact-checked by ThePrint.