GCCs in India are doing very well, and India’s exports of services are going reasonably well, despite the concerns around AI, says Axis Bank Chief Economist Neelkanth Mishra, in an interview with BW Businessworld.
“Because of AI, workflows and organisation structures are likely to change meaningfully. In our view, the pattern of outsourcing, which started about 35 years ago, has grown incessantly because it required, at a global economic level, expertise to be built in a few firms. And those firms then made those resources available to whoever needed them, and optimised on that. So, an outsourced structure was the best and the most efficient way of organising workers,” he said.
“As Large Language Models start doing a large part of the coding and testing, and the time taken from business requirements being specified to implementation shrinks, the organisation boundary itself may shift, meaning that it might make sense for firms to start to insource more, or at least outsource less,” he added.
“The Indian advantage of manpower being available at, say, USD 500 or USD 700 a month, means it's still going to be an advantage, because the same resource in the US would cost USD 8,000, USD 10,000. So, replacing, say, a USD 10,000-a-month engineer with a USD 500-a-month engineer, along with a USD 200-per-month LLM licence, may be better. So, the outsourcing, the move of work to India, may still continue, but it may happen to GCCs and not necessarily to IT services firms,” Mishra said.
“While this is the current expectation, we still need to understand how exactly this will evolve, because how and when AI stabilises is still a question mark. How quickly the process flows, and organisation structures are going to change is something that we'll discover in the next 3-5 years,” he added.
Around 1800 GCCs operating in the country currently generate nearly 2 million direct jobs and 10 million indirect jobs, according to government estimates.
(full text of the interview to follow) |
