Opinion | India At A Crossroads: Can The IT Giant Pivot To An AI-Driven Future?
AI-driven future offers India an opportunity to leapfrog its rivals and shape the next wave of technological evolution. But this requires decisive action—greater investment, education reform, and an AI-friendly policy framework
For decades, India’s IT powerhouses have been the backbone of the global technological revolution, supplying code and talent that have shaped modern digital infrastructure. However, with artificial intelligence (AI) poised to upend the very foundation of software services, the world’s largest outsourcing hub must now make a decisive shift toward AI-driven innovation. The urgency of this challenge cannot be overstated, as India risks being left behind by AI powerhouses like the United States and China if it does not act swiftly.
THE AI CHALLENGE
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The emergence of cost-effective, open-source AI models—such as those developed by Chinese start-up DeepSeek—signals a paradigm shift in the global tech landscape. AI’s ability to automate complex processes, enhance decision-making, and create new revenue streams is compelling forward-looking organisations to recalibrate their focus. According to Raj Kapoor, founder and chairman of the India Blockchain Alliance, AI is no longer a futuristic concept but an immediate necessity.
A recent International Monetary Fund report warned that nearly 40 per cent of jobs worldwide could be affected by AI-driven automation. Meanwhile, India’s dominant software services market, which holds a commanding 44 per cent global share, is facing slowing growth, with an annual expansion rate projected at just 11.9 per cent through 2028. In stark contrast, the AI sector is set to grow at a staggering 37.3 per cent annually between 2024 and 2030, according to data cited by Kapoor.
THE GOVERNMENT’S RESPONSE
Recognising the stakes, the Indian government has taken initial steps to foster AI development. In March 2023, it launched the $1.25 billion “IndiaAI Mission" aimed at nurturing start-ups and building AI infrastructure. Additionally, a modest $575,000 allocation in the latest federal budget has been earmarked for the establishment of three AI education centres focused on research.
India’s IT Minister, Ashwini Vaishnaw has also hinted at the imminent launch of a foundational AI model tailored to India’s diverse cultural and linguistic needs. He praised DeepSeek’s open-source model, noting that it demonstrated how powerful AI could be developed at a fraction of the cost seen in other nations. However, while these initiatives signal intent, they pale in comparison to the aggressive AI investments made by China and the United States.
STRENGTHENING INDIA’S AI ECOSYSTEM
Abhijit Bhaduri, a US-based talent management expert and former Microsoft executive, believes that India does not need to abandon its software-services strengths but evolve toward AI-driven value creation. Observers argue that India’s vast and diverse data sets—spanning healthcare, agriculture, and financial transactions—offer a unique advantage. These could be leveraged to develop proprietary AI solutions tailored to both domestic and global markets.
However, success hinges on more than just data. India must accelerate investment in AI infrastructure, reform its education system, and mobilise its young workforce to meet the demands of an AI-powered future. Without these structural changes, India risks remaining a service provider rather than an AI innovator.
A DOUBLE-EDGED SWORD
India’s dominance in software services is both an asset and a liability. While the sector has long driven economic growth, critics argue that its focus on outsourcing has stifled innovation. Supriyo Chaudhuri, CEO of UK-based e1133, which partners with Indian universities on AI education, warns that the software-services model has made India dependent on external ideas and technological frameworks.
Chaudhuri emphasises that AI is disrupting this value chain, and without bold policy interventions, India could remain a cog in a system designed by others. He points to China’s sweeping education and infrastructure reforms as a model for India to emulate. While the 2020 National Education Policy introduced software coding in schools from the sixth grade, uneven implementation across states has hampered progress. Additionally, higher education remains a weak link, with neglected research labs and outdated curricula limiting India’s capacity for homegrown innovation.
THE ROLE OF INDIA’S YOUTH
India’s demographic dividend offers a glimmer of hope. With nearly 65 per cent of its population under the age of 35, the country has the potential to harness a generation of young innovators to lead the AI revolution. However, this requires a structured approach to upskilling at scale.
Bhaduri suggests embedding AI education into school curriculums and fostering industry-academia partnerships to provide students with hands-on experience solving real-world problems. He also proposes the development of an “AI grid"—a nationwide network that would pool computing resources across universities, research labs, and start-ups—to eliminate barriers of entry for smaller players.
The government should also leverage its global diaspora for mentorship and collaboration in building AI expertise. India’s tech talent abroad, particularly in Silicon Valley, can play a pivotal role in transferring knowledge and driving AI adoption back home.
POLICY GAPS AND INVESTMENT CHALLENGES
While India’s government has made some strides, experts argue that the country’s AI ecosystem is still underfunded. Compared to China’s multi-billion-dollar AI investments, India’s financial commitments remain modest. The lack of clear regulations on AI ethics, data privacy, and intellectual property rights further complicates AI adoption. Policymakers need to address these challenges to create a supportive environment for AI innovation.
Additionally, the lack of high-performance computing infrastructure in India remains a major bottleneck. Without scalable computing power, even the most talented AI researchers in India struggle to train large models, forcing them to rely on foreign cloud providers. This underscores the need for India to develop indigenous AI infrastructure to maintain technological sovereignty.
THE CLOCK IS TICKING
Kapoor warns that traditional software services are already showing cracks in their ability to handle instant data analysis and complex automation. Companies that fail to integrate AI into their processes risk becoming obsolete. The shift toward AI is not merely about staying competitive; it is about redefining India’s place in the global tech ecosystem.
India’s private sector must also play a proactive role. Leading IT firms like TCS, Infosys, and Wipro must go beyond AI adoption and actively invest in AI research and development. The current trend of using AI primarily for cost-cutting and automation must evolve into AI-driven product innovation.
The AI-driven future offers India an opportunity to leapfrog its rivals and shape the next wave of technological evolution. But this requires decisive action—greater investment, education reform, and an AI-friendly policy framework.
If India fails to seize this moment, it risks becoming a footnote in the story of AI’s rise rather than a leading protagonist. The choice is clear: adapt and lead, or stagnate and be left behind.
The writer is a technocrat, political analyst, and author. He pens national, geopolitical, and social issues. His social media handle is @prosenjitnth. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect News18’s views.
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