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This report comes from this week’s CNBC “Inside India” newsletter, which brings you timely, insightful news and market commentary on the emerging powerhouse and the big players behind its meteoric rise. Like what you see?You can subscribe here.
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This is the story of two European companies. But it could be a sign of India’s growth story.
When fintech Klarna said earlier this year it was using artificial intelligence to provide customer service, shares of the French outsourcing giant Remote performance Plunged nearly 20%.
The Swedish buy now, pay later company revealed that its artificial intelligence chatbot is currently filling 700 full-time customer service jobs, saving the company $40 million. That was enough to scare investors into dumping Teleperformance stock, fearing that artificial intelligence would disrupt its profitable call center business in the future.
The Paris-listed company has a market value of nearly 6 billion euros ($6.4 billion) and employs 500,000 people around the world in telemarketing, customer relationship management and content moderation, all of which face disruption by artificial intelligence. risk. Since ChatGPT’s launch, the company’s share price has fallen 55%, while the French stock market has risen 24%.
Could Teleperformance’s plunge in share price be the canary in the coal mine of what’s likely to happen in India due to artificial intelligence?CEO of India Tata Consultancy Services Think so.
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K Krithivasan recently told the Financial Times that artificial intelligence could potentially resolve customer complaints before people even pick up the phone and call a company’s helpline, eliminating most call center jobs in the process.
TCS, which has a global workforce of about 600,000 people and mainly employs software developers, expects this to happen “within a year or so.”
While Kritivasan says artificial intelligence has yet to cause job losses, others are already calculating the impact it might have on the labor market.
Researchers from the World Bank, International Monetary Fund and Oxford University found that demand for AI skills is hurting India’s workforce demand for non-AI roles. This means that for every job created that requires AI expertise, there are fewer jobs in other industries.
“We find that AI adoption initially coincides with a small increase in general hiring, but then reduces the need for non-AI workers over the next few years, so that the overall effect is largely negative,” the researchers said.
However, given the huge role automation in the business process outsourcing (BPO) sector plays in the Indian economy, it may soon become politicized.
Although the industry provides only 0.4% of all jobs in India, it accounts for 6.5% of India’s GDP and 25% of India’s exports, according to Capital Economics. It also employs many young Indians – more than 80% of India’s unemployed population currently consists of young people.
Prime Minister Narendra Modi, who is running for a third term in the ongoing general election, has come under pressure from opposition parties for not doing enough to create jobs. If he is re-elected, artificial intelligence appears to be making his job much more difficult.
However, it’s not all doom and gloom.
Shilan Shah, deputy chief emerging markets economist at Capital Economics, estimates that even in the absolute worst-case scenario, which is highly unlikely, in which the BPO industry is completely devastated, the losses would be It will be only 0.8 percentage points lower than the annual GDP growth rate.
Yes, every job loss is a tumultuous and painful time for the individual and their families. But given the role of macro forces, this may be just a blip in India’s growth trajectory.
For example, investment bank Nomura predicts that India’s economy will grow by an average of 7% over the next five years, supported by growth in manufacturing, which has yet to see true artificial intelligence disruption.
India also appears to be focused on creating jobs in high-tech sectors, with some recent success.
QualcommUS chip giants have started designing semiconductors in Chennai using the country’s pool of talented engineers. India has also been attracting foreign chipmakers such as Taiwan’s Powerchip Semiconductor Manufacturing Co. to set up operations in the country.
In addition to creating jobs that are unlikely to be immediately disrupted by AI, India could become a net beneficiary of AI.
Due to its geographical features, India is one of the most vulnerable countries in the world to the effects of climate change.
The India Meteorological Department revealed earlier this year that it would use artificial intelligence to improve weather forecasts and predict severe events. This is expected to have a positive impact on the agricultural sector, which employs about 45% of India’s workforce.
Rapid improvements in India’s financial infrastructure – the UPI payment network – have spawned several new technology companies that are now using artificial intelligence to reduce financial costs.
India is also unlikely to tackle the challenges posed by artificial intelligence alone. Goldman Sachs estimated last year that a quarter of jobs in the United States and Europe were also at risk of disruption.
While this is a challenge for India, it is unlikely to be a problem only for India.
Election latest news
Their main demand is to ensure minimum support prices for agricultural produce to cope with rising production costs. But the government shows no sign of capitulation, even though it risks losing massive farmer support at the ballot box.
Economists, meanwhile, say farmers’ demands are not economically viable.
“These requirements will not only be detrimental to the agricultural sector but will also have a major impact on the economy. The entire economy will be thrown into chaos,” said economist Ashok Gulati, former chairman of the Agriculture Costs and Prices Commission.
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Nomura Securities predicts that the Indian economy will grow by an average of 7% in the next five years. The Bank of Japan’s new forecast hinges on policy continuity after the election result – no matter who wins. The forecast is much higher than Nomura’s growth expectations for China (3.9%), Singapore (2.5%) and South Korea (1.8%) during the same period.
America’s fastest-growing sport is looking to India for its next source of growth. The United Pickleball Association and Global Sports last week announced an agreement to bring the PPA Tour and USA Pickleball Major League to India. For those who don’t know, pickleball is a racket sport that combines elements of tennis, table tennis, and badminton.
The White House has commented on India’s alleged involvement in the assassination plot. The Washington Post reported that Indian intelligence services were involved in assassination plots in Canada and the United States.India’s foreign ministry said the report “made baseless and unsubstantiated accusations of serious issues” while White House spokesperson Karine Jean-Pierre told reporters. “We will continue to raise our concerns.”
What happened to the market?
Indian stock market index, Sensex and nifty 50, had another positive week – up 1% and 1.2% respectively. Year to date, the benchmark has gained 3.28% and 4.22%, respectively.
India’s 10-year government bond yields have been range-bound, with yields ranging from 7.15 to 7.20 last week.
this indian rupee has weakened Dollar, even as global oil prices edged lower as markets repriced for smaller U.S. interest rate cuts this year. However, the market also believes that Fed Chairman Powell is less hawkish than expected because he downplayed the possibility of raising interest rates at a press conference on Wednesday.
This week, CNBC TV interviewed Raghuram Rajan, former governor of the Reserve Bank of India and professor of finance at the University of Chicago Booth School of Business. He said India’s 8.5% growth rate was somewhat “fake,” but added that “even 6-6.5%” was a pretty good number for the country.
Meanwhile, Ashish Jain, chief financial officer of Indian food processing company KRBL, discussed the issue of adverse weather conditions leading to a decline in agriculture in the country.
CNBC’s Ayushi Jindal A report was also issued Inside Qualcomm’s new design center in Chennai, where they are already designing chips.
What happens next week?
In addition to elections, Indegene, which provides digital services to the life sciences industry, will also enter the Indian primary market. The subscription period is from May 6 to 8 and the shares are likely to be listed on BSE and NSE on May 13.
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