Bengaluru Might Become the Biggest Victim of AI
For the past few decades, Bengaluru has been the hub of India’s tech industry, drawing people from all corners of the country into the city. The city’s thriving IT, GCC, and startup ecosystem makes it the Silicon Valley of the East. The rise of AI has only accelerated this, as AI engineers build products and startups from the comfort of their apartments or coffee shops. Some even host investor meetups at tea stalls and successfully raise funding. However, everything comes at a cost. What was once referred to as the outsourcing hub of the world, with US companies often referring to their job losses as “getting Bangalored”, is now struggling with the rapid rise of AI-driven automation. Low-skill, repetitive IT jobs are being replaced by automation at an alarming rate, prompting even IT giants like HCLTech and TCS to reevaluate their 30-year-old business model to cope with the influence of AI. The software development and services industry is undergoing a transformation where AI can now generate, debug, and optimise code with increasing efficiency. This is much of what the country’s favourite tech hub offers. Many Reddit users believe that the biggest victims of AI will be low-salaried IT employees, particularly those in service-based roles such as testing, support, and entry-level development. “The way things are moving, there’s a high chance of mass job losses in Bengaluru in the coming weeks to months,” a user predicted. The first signs of AI disruption are already here Companies are cutting jobs, automation is replacing entry-level developers, and outsourcing—the backbone of Bengaluru’s IT industry—is under threat. According to Nasscom, over 1.4 million people were employed in the most vulnerable operations in 2021, with a third of them working in call centres. AI has always been expected to affect call centre and BPO jobs the most, and this shift has already begun in 2022. “AI and automation…that’s the reality. AI will play a role everywhere…in the areas of medical equipment, smartphones, chipmaking and so on. Robots will replace human beings,” Karnataka industries minister MB Patil told DH, adding that there were even robot masseuses. Patil, however, pointed out that it was “too early” to speculate how AI would impact jobs. Previously, IT firms charged clients based on workforce size, but many now link fees to outcomes instead, becoming a service-as-a-software. The global demand for human workers is set to decline even further with predictions around AI agents getting into the workforce. In the year ending March, the industry added just 60,000 jobs—the lowest increase in over a decade. Meanwhile, major IT firms like TCS, Infosys, and Wipro saw their combined workforce shrink by more than 60,000, as the focus remained on AI and automation. While companies largely attribute the hiring slowdown to post-pandemic overexpansion rather than automation, they expect recruitment to improve this year. Despite concerns, industry leaders remain optimistic that AI will create new business opportunities, even as it disrupts existing operations. “AI is definitely reshaping Bengaluru’s job market, but I wouldn’t say we’re looking at mass job losses or an economic downturn,” Krishna Vij, VP of TeamLease Digital told AIM. “Yes, some low-level coding roles might get automated, but at the same time, we’re seeing a surge in demand for AI engineering, machine learning, and cloud expertise.” Vij added that Bengaluru has always adapted to tech shifts and moved from IT outsourcing to a global innovation hub, and now, AI is just the next phase. “Companies aren’t just cutting jobs; they’re focusing on upskilling their workforce.” AI tools have significantly reduced the need for junior engineers who once handled mundane coding tasks. Large corporations, once known for hiring tens of thousands of software engineers annually, are now re-evaluating their workforce needs. But this is just the beginning. While developers are feeling the heat, AI’s impact won’t be limited to tech jobs. Automation is creeping into finance, operations, accounting, and even legal services. The city, which once prided itself on being India’s brain trust, may soon find itself in an identity crisis. The Migration Boom Might Get Affected For years, Bengaluru has been a magnet for talent from across India. Though it has been iterated several times that AI will create new types of jobs resulting in a net-zero job displacement over time, much like how computers and the Internet did, the impact cannot be completely zero. Sebastian Thrun, Google X cofounder, articulated this dichotomy at a recent summit, noting that while approximately 60% of current jobs may disappear, far more new jobs will emerge as a result of AI and other technologies. Thrun emphasised that AI’s rise would lead to a shift in job types rather than permanent employment reduction. Young graduates from smaller towns and cities dreamed of moving here, lured by the promise of high-paying tech jobs. This influx of workers fueled an entire economy—rental housing, hostels, PG accommodations, food joints, and local businesses. But what happens when these jobs dry up? With AI automating thousands of roles, the need for massive tech hiring is shrinking. The city’s famed “tech migration” could slow to a trickle, leaving landlords, small businesses, and local economies in trouble. PG owners who once charged exorbitant rents for cramped accommodations may soon find their properties sitting empty. Restaurants, tea stalls, and street vendors who catered to Bengaluru’s massive IT workforce may see dwindling footfalls. “I don’t see a mass exodus happening. Bengaluru still attracts top talent, startups, and global firms. If history has taught us anything, it’s that every tech disruption, whether it was automation or cloud, has led to transformation and not decline,” Vij said. Funnily enough, in the short term, at least, we might see Bengaluru’s traffic improving due to fewer people commuting to work. Bengaluru’s real estate market has long been inflated due to the sheer number of tech workers willing to pay high rents. If layoffs continue and hiring slows down, landlords, especially those around Outer Ring Road (ORR), may struggle to find tenants. The once-booming rental market could see a sharp correction. From chai stalls near tech parks to high-end bars in Indiranagar, Bengaluru’s economy thrives on disposable income from IT workers. A slowdown in hiring and rising job insecurity could dent consumer spending, hitting local businesses hard. While Bengaluru’s GCCs have been resilient and are also increasing, AI is forcing them to rethink their workforce structures. If AI-powered automation reduces their need for human talent, even these global giants may scale down their Indian operations over time. The city has survived technological shifts before. Back when automation replaced data entry jobs, Bengaluru managed to adapt. When cloud computing disrupted IT services, Bengaluru built expertise around it. However, AI is a different beast—its impact is broader, faster, and harder to predict. Academia has noted that AI is not merely a technological enhancement but “a pivotal factor driving the IT sector’s evolution in Bengaluru”. This perspective suggests that the city could emerge strengthened rather than diminished through strategic adaptation. To stay relevant, Bengaluru’s workforce needs to evolve. Experts suggest that upskilling in AI, machine learning, and automation-related fields is the only way forward. However, not everyone will be able to make the leap, especially those in roles that are already becoming obsolete.
While developers are feeling the heat right now, AI’s impact won’t be limited to tech jobs.
Companies are cutting jobs, automation is replacing developers, and outsourcing—the backbone of Bengaluru’s IT industry—is under threat.
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Mohit writes about AI in simple, explainable, and often funny words. He's especially passionate about chatting with those building AI for Bharat, with the occasional detour into AGI.