Former Reserve Bank of India Governor Raghuram Rajan offered a measured assessment of the impact artificial intelligence (AI) is likely to have on India’s services-driven economy, particularly its software and IT sector. In an interview with Bloomberg Television, Rajan acknowledged that AI will be highly disruptive to routine processes and traditional business models, but he rejected the notion that the sector will be completely upended or collapse under the pressure of automation. He emphasized that while AI presents challenges, especially for functions that rely heavily on manual coding and back-office tasks, the broader services story in India can still persist and evolve if managed well.
Rajan pointed out that disruption does not equate to an existential crisis. He noted that the pace of real-world AI adoption outside cutting-edge firms remains uneven, with many global corporations yet to deploy advanced automation at scale. This slower adoption offers Indian companies a window to adjust, reskill, and reposition themselves, potentially moving up the value chain instead of being displaced. He argued that India’s large pool of skilled, cost-competitive labor — combined with access to the same AI tools — could help firms remain relevant even as the technology reshapes workflows.
A key part of Rajan’s message was the importance of rapid reskilling and agility. He stressed that software companies and their employees need to quickly embrace new skills and adjust to changing demands. While he acknowledged that certain routine, low-value tasks may shrink or disappear, he also highlighted that the same AI advances could create new opportunities in areas such as AI solution development, higher-end engineering, and digital transformation services. In his view, India’s strength in skilled services remains a competitive edge, provided workers and firms adapt swiftly.
Rajan also touched on broader economic priorities, suggesting that policy emphasis should expand beyond traditional services and into human capital development, including education, training, and research and development, to prepare the workforce for future technological demands. His comments sought to calm fears of a “doomsday” scenario while urging preparation and strategic adaptation. The overall message was clear: AI will disrupt and reshape the services sector, but with the right response, it need not derail India’s economic trajectory.
