All of these have been struggling to create jobs for the millions of young graduates who participate in the workforce each year, with the potential to affect India’s wider economy.
With the absence of a strong manufacturing sector, these software companies made India the world’s back office in the 1990s, and were a priority employment option for hundreds of thousands of new IT workers. They have created new, wealthy middle classes that foster growth in many cities and drive the demand for cars and homes.
However, as stable, high-paying jobs shrink, there are questions about the service-driven economic boom in India.
Until just a few years ago, the IT major in India absorbs 600,000 freshmen each year. According to TeamLease Digital, that number has dropped dramatically to around 150,000 over the past two years.
Other emerging sectors such as financial technology startups and GCC (Global Capacity Centre) are offshore units of multinational companies that perform support tasks like it, finance, research and development — absorbing the rest, but at least “20-25% of freshmen have no jobs,” says Sharma.
She added, “GCCS never matches the amount of employment done by IT companies.”
Several top business leaders in India are beginning to flag the economic outcomes of these trends.
India’s trimmed IT sector “can have a negative impact on many related services and industries, crash real estate and hit premium consumption,” said D Muthukrishnan, one of South India’s largest mutually funded distributors, responding to the announcement of TCS.
A few months ago, entrepreneur Arindam Paul, founder of motor technology company Atomberg, warned in a linked post about the potentially crippling impact of AI on the middle class of India.
“The nearly 40-50% of white-collar jobs that exist today may no longer exist,” Paul wrote. “And that would mean the end of the middle class and consumption narrative.”
How quickly Indian tech giants adapt to the extent of the disruption brought about by the AI revolution will determine whether the country can maintain its advantage as a global technology player. Also, whether we can expand the middle class in consumption, which can keep GDP growth on a steady basis.
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