Andreessen rings alarm bell on AI challenge to IT

'Manual work lengthy, prone to errors; large firms may subsume work of IT firms'

- Jas Bardia

Will artificial intelligence (AI) impact jobs and the powerhouse that is the Indian IT services industry? The debate, which has been around for a while, picked up steam with the advent of generative AI tool ChatGPT in November 2022.

The misgivings have escalated now, with the world's largest venture capital (VC) firm joining the debate. In a blog post on 13 February, California-headquartered Andreessen Horowitz argued that the mundane and repetitive work of the information technology (IT) services industry could be automated by using AI tools, and that AI startups will subsume work done by large IT services companies.

"We think there are many massive companies to be created that subsume the work that BPOs do," said Kimberly Tan, an investing partner at Andreessen Horowitz, in a blog post on 13 February. BPOs refer to business process outsourcing firms.

Tan added that while BPOs do important work, the experience of working with them is not seamless for clients.

The views of Andreessen Horowitz or A16z, which has $44 billion in assets under management and has built a formidable reputation with early investments in Airbnb and Meta, have added fresh fuel to the debate about the future of the global IT industry in general, and India's $254-billion technology industry in particular.

The Indian industry (including IT services, BPO and hardware) employs 5.4 million people and is the country's largest job creator in the organized space.

While analysts are divided over the views of the top VC firm, India's big IT services companies for now are portraying their ability to handle the changing situation.

The development comes in the backdrop of the homegrown IT services industry-led by Tata Consultancy Services Ltd (TCS), Infosys Ltd, HCL Technologies Ltd, Wipro Ltd, and Tech Mahindra Ltd-growing revenues last fiscal at the slowest clip (3.8%) and adding the fewest employees (60,000) in a quarter of a century of its existence.