In Gurugram, just outside New Delhi, Krishna Khandelwal is leading a quiet revolution that could reshape India’s workforce. His startup, Hunar.AI, uses artificial intelligence to create chatbots capable of managing entire hiring processes, from resume screening to employee onboarding. “For onboarding, you don’t need humans at all,” Khandelwal said, signaling a shift that could make human recruiters increasingly obsolete.
For decades, India built its global economic rise on providing educated, English-speaking workers at a fraction of Western costs. The outsourcing industry now employs over six million people and contributes nearly $300 billion annually, representing more than 7% of the nation’s GDP. But AI threatens to upend this model, potentially replacing the very jobs that propelled India into the global tech spotlight.
Industry observers warn that the disruption is inevitable. Deedy Das, a partner at Menlo Ventures, stated, “Markets are pretty efficient. If a tool exists that does a job cheaper, it will be adopted. I’m surprised it hasn’t happened at a faster clip, but it will.” The early tremors are visible: Tata Consultancy Services has cut its workforce by over 20,000 since 2022, while Infosys and dozens of startups have slowed hiring or laid off staff.
University graduates are now scrambling to “upskill” in AI-related technologies to remain employable, but opportunities remain scarce. Tech stocks have stumbled under fears of AI-driven disruption, especially after a U.S.-based report predicted that AI could collapse the marginal cost of software labor to nearly nothing by 2028.
Prime Minister Narendra Modi has publicly recognized the challenge, positioning India to become an AI power while encouraging engineers to innovate domestically. Yet structural limitations persist. India’s infrastructure and reliance on foreign technology, from microchips to foundational AI models, could hinder its ability to fully capitalize on the AI revolution. Outsourcing giants have signed deals with U.S. companies to expand AI usage, but dependency remains.
The societal impact could be profound. Educated young professionals, concentrated in cities like Bengaluru, Hyderabad, and Pune, represent a politically vocal middle class. Unemployment among them has already reached alarming levels, and further job losses could exacerbate unrest. “If you’re a young engineer getting out of university, I’d be worried,” said Rajesh Nambiar, president of Nasscom.
Not all developments are bleak. Startups like LimeChat are leveraging AI to create global products, showing that India retains the potential to innovate and compete internationally. Outsourcing firms are diversifying beyond traditional call centers, offering AI-driven services that may sustain their relevance in the short term. Tata Consultancy Services reported $1.8 billion in AI services revenue last quarter, aiming to become the “world’s largest AI-led technology services company.”
Still, the ground reality for entry-level workers is stark. AI-driven roles often involve repetitive, low-paying work, while traditional tech entry points vanish. Colleges are scrambling to keep curricula aligned with rapidly evolving technology, forcing students to adapt quickly. At R.D. Engineering College in Ghaziabad, hiring rates for graduates have dropped from 85% to 75% in two years, illustrating intensifying competition.
Hunar.AI exemplifies the challenge: Khandelwal’s company reduced its human recruiters from 65 to 45 and anticipates a further drop to 25, even as revenues and client numbers grow. By Khandelwal’s estimate, the company has already eliminated 1,000 jobs in human resources and could soon perform the work of 10,000. This transformation highlights the stark choice India faces: embrace AI-driven growth or confront massive upheaval in its workforce.
