Recently in conversation, a friend on the board of a large listed firm in India expressed fears that automated programming tools powered by AI, for example, ChatGPT, could lead to erosion of India’s IT/ITES exports, resulting in job losses and social unrest.
However, I consider this to be an opportunity for India to move up the value chain. Consider this, for example, Israel, with a population of just 8.9 million, has IT/ITES exports of approximately $50 billion (CY2020). India’s population is approximately 138.9 million, and we export IT/ITES services worth approximately $180 billion (FY 2022).
India’s IT services exports will increase exponentially if we are able to achieve the per capita productivity of Israel. If India achieves a comparable level of per capita productivity that Israel demonstrates for IT services exports, Indian exports of IT can be $8 trillion in the next two decades, by 2045.
The question then is about the demand - will the global economy require this level of IT services exports from India?
The 2022 global GDP was estimated at USD 100 trillion. In nominal terms of growth recorded over the past two decades, the global GDP could increase to USD 300 trillion Most of this growth (USD 200 trillion) will be driven by technology embedding in all aspects of the economy, such as Industry 4.0 / IoT / DLT and AI.
To enable this next USD 200 trillion, at current productivity levels of Indian industry, which is the mainstay of global IT outsourcing, is nearly impossible. The shortages of skilled programmers, which have persisted at various intensities since 2012, will just worsen into an industry crisis if productivity does not improve.
By adopting AI effectively, India may be able to produce more value from its population and support the growth of the global economy for the next two decades or more. This will benefit the world in terms of a better standard of living, and serve India well by way of higher IT/ITES exports.
When viewed from a wider perspective, the IT industry need not fear the programming prowess of AI, but should change their business strategies and methods to co-opt this productivity-enhancing tool.
Shailesh Dhuri
CEO, Decimal Point Analytics Pvt. Ltd
