ING Report Shows India's Outsourcing Industry Not Significantly Hurt by AI

A report by ING Bank NV economist Deepali Bhargava says India's outsourcing industry shows little sign of being squeezed out by AI, as the country moves up the value chain into services that are harder to automate. Software services exports now make up about 5.2% of India's GDP, up from 3.3% before the pandemic, while business services have more than doubled to 3.3%.

India holds over half of the global outsourcing market. Software services exports bring in about $205 billion a year and employ around 5.8 million people. Software and business services together account for about 8.5% of India's GDP and are a key source of foreign exchange.

Bhargava said fears of AI disruption in India and the Philippines are premature, and current signs show the industry is adapting rather than declining. Growth is shifting from repetitive work like data entry and document checks to higher-value work such as data analysis and software development.

Since 2022, India's digitally delivered services exports have grown 45% in total, above the global increase of 32%, helping India expand its market share further.