The industry is adapting, but the changes could result in the loss of many coveted jobs.

According to the Wall Street Journal, India's major outsourcing firms are already incorporating AI and plan to expand its use across their operations. However, this may not safeguard low-end roles in call centres and other basic tasks within the business process outsourcing sector.

WNS CEO Keshav Murugesh said that if he was just doing a simple contact centre service then generative AI is going to replace that person very quickly.

AI poses a threat to businesses globally, not just to India's $250 billion outsourcing industry. The outsourcing boom in India over recent decades led to the “getting Bangalore-d” phenomenon in the US, where American jobs were outsourced to more affordable Indian talent.

The impact of AI could be profound, as the industry employs 5.4 million people and contributes about eight per cent of India's economy, according to tech-industry body Nasscom. More than 80 per cent of S&P 500 companies outsource some operations to India, according to HSBC.

Hackett Group tech consultant Vin Kumar warned that US companies will cease using Indian outsourcing firms unless they replace human workers with automation.

“If Indian firms are not able to do it then they will bring these operations back in-house,” he said.

The most vulnerable operations employed over 1.4 million people in 2021, with a third of these jobs in call centres, according to Nasscom. “The prize is to move up the value chain and go after new processes,” said Murugesh.

AI may accelerate existing trends that have made the industry less labour-intensive. A decade ago, companies needed about 27 employees to generate $1 million in annual revenue; this number has now fallen to 21, Nasscom data show.

Companies traditionally charged clients based on the number of employees working on their projects, but now fees are increasingly linked to the outcomes delivered.