India, which relies on its IT sector for 7.5% of its GDP, is grappling with the rapid integration of artificial intelligence into its massive customer service and business process outsourcing (BPO) industries. Startups are fine-tuning AI agents that can talk and message like humans, capable of handling increasingly sophisticated customer interactions.
LimeChat, a conversational AI startup, boasts an “audacious goal: to make customer-service jobs almost obsolete,” claiming its AI agents can slash the required number of workers by 80% to handle 10,000 monthly queries. “Once you hire a LimeChat agent, you never have to hire again,” said Nikhil Gupta, the 28-year-old co-founder. The company’s bots already handle 70% of customer complaints for its clients and plan to achieve 90-95% efficiency within a year, automating thousands of jobs.
The economic incentive is clear: a bot costing around 100,000 rupees per month can automate the work of at least 15 human agents—roughly the same cost as three customer-care staff. This has led to skyrocketing revenue for AI firms, like Haptik, which saw its revenue jump from under ₹8.7 crores in 2020 to almost ₹158 crores last year by offering “AI agents that deliver human-like customer experiences” that can cut support costs by 30%.
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The Human Cost of Automation
For the millions of workers in India’s BPO sector, the rise of AI translates directly into job insecurity. Megha S., 32, who earned ₹8 lakhs ( $10,000) a year, was laid off just before India’s festive season after the company moved to implement AI tools. She was told she was “the first one who has been replaced by AI,” a reality she kept hidden from her parents.
In a stark example of displacement, a Bengaluru-based advertising agency, The Media Ant, cut 40% of its workforce, replacing 15 salespeople with AI bots that identify leads and send emails. Another six-member call center was replaced with a voice agent named Neha. Investment bank Jefferies predicted in September that India’s call centers could face a revenue hit of 50%, and other back-office functions about 35%, from AI adoption over the next five years.
While Prime Minister Narendra Modi has suggested that “work does not disappear due to technology. Its nature changes and new types of jobs are created,” critics are concerned. Santosh Mehrotra, a former official, criticized the government for a “lack of urgency in assessing AI’s effects on India’s young workforce,” noting, “There’s no gameplan.”
Upskilling in a Scramble: The New Educational Frontier
In response to the shifting job market, a massive upskilling effort is underway. Historically known for offering courses in basic IT skills, training centers in Hyderabad’s Ameerpet neighborhood are now increasingly focused on AI training. Quality Thought, a training center, is offering a nine-month course in AI data science and prompt engineering for about ₹1.1 lakhs ($1,360) more than double the price of a traditional web-development program. Recruiters are now specifically asking for students with basic AI skills.
However, the shift is rapid, and the outlook remains “pretty chaotic,” according to venture capitalist Vinod Khosla, who co-founded Sun Microsystems. He predicts, “All IT services will be replaced in the next five years.” India’s business process management segment, which employs 1.65 million workers, has already seen its net headcount drop by fewer than 17,000 workers in each of the past two years, down from 130,000 workers between 2022 and 2023.
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The Limits of the Robot: A Need for Human Touch
Despite the efficiency and cost savings, AI chatbots are not without their limitations. Customer surveys still show many consumers dislike chatbots. An August 2024 survey of Indian consumers found that although 62% of purchases were influenced by AI recommendations, the “desire for a human connection remains strong,” with 78% preferring online platforms that provide human support.
While chatbots can handle routine queries like order tracking, they often falter on complex issues. One LimeChat bot, when asked for proof of a client’s claim about medical professionals trusting its products, replied: “I am sorry. I don’t have enough information to answer your question.” Experts suggest that for now, the deployment of AI is primarily to handle general queries, leaving only a “very small number of people” needed to manage “negative experiences” or highly agitated customers.
