Harnessing AI to Shape India’s IT Leadership

• 13 Aug 2025

For Prelims: Artificial intelligence, Large Multimodal Models, Non-personal datasets,  Generative AI, MSMEs 

For Mains: Impact of AI in IT Sector, Opportunities & Challenges of AI for India's Economic Growth, Key Challenges AI Poses to India's Traditional Economy 

Source: TH 

Why in News?

The Indian IT sector, a USD 280 billion industry employing 5.8 million people, is undergoing a profound shift as Artificial Intelligence transforms service delivery and business operations. This disruption, however has led to moves like TCS halting experienced hiring and cutting 12,000 jobs, sparking concerns over the future workforce and the evolving nature of IT employment. 

What are the Key Applications of AI in the IT Sector? 

• Productivity, Automation & Workforce Transformation: AI has increased software development productivity through tools like coding assistants and automated code generation (GitHub Copilot by Microsoft).  
  • AI automates routine IT tasks, reducing errors and boosting efficiency. For instance, UiPath is a leading robotic process automation (RPA) tool that uses AI to automate repetitive, rule-based tasks. 
  • Developers are evolving into AI supervisors focusing on strategy, ethics, domain-specific logic, and security. 
    • McKinsey predicts that between 2030 and 2060, generative AI could automate about 50% of global work activities. 
• Enhanced Cybersecurity & Threat Detection: AI algorithms detect unusual patterns in real-time for early threat identification and prevention. Machine learning models analyze large datasets to predict attacks, while AI-driven systems respond faster than humans, strengthening IT security. 
  • Darktrace’s “Enterprise Immune System” uses AI to learn normal network behavior and flags unusual activities, like unexpected file transfers or logins from new locations, as potential threats. 
• Improved Data Management: AI automates data collection, storage, and analysis of large, unstructured datasets, enabling sectors like Customer Relationship Management (CRM) to better understand customer behavior and drive business growth. 
• Predictive Maintenance: AI analyzes historical data to forecast hardware and software failures, enabling proactive maintenance that reduces downtime and extends the lifespan of IT infrastructure. 
  • For instance, Company Splunk uses AI to predict system failures from performance data, enabling proactive maintenance. 

What are the Key Challenges in the Indian IT Sector’s AI Adoption Journey? 

• Skill Gap & Workforce Displacement: Rapid AI adoption has created a significant skill gap, with urgent need to retrain the workforce in AI tools, data science, cybersecurity, and ethical AI.  
  • Routine coding, maintenance, and back-office roles face automation risks, leading to potential unemployment and wage stagnation in certain segments. 
  • A World Economic Forum (WEF) report suggests that AI and automation could displace up to 85 million jobs by 2025. 
• Regulatory, Ethical & Security Concerns: Ensuring AI systems are transparent, unbiased, and GDPR-compliant adds operational complexity.  
  • Protecting data privacy and security is vital as AI processes sensitive data, requiring regular ethical audits and strict accountability. 
  • India’s Digital Personal Data Protection Act, 2023 (DPDP Act) sets a framework for data privacy, but its applicability to large-scale data collection and processing for AI model training remains unclear.. 
• Integration Challenges with Legacy Systems: Many Indian IT firms operate on outdated legacy infrastructure, making AI integration complex, costly, and time-consuming.  
  • Migrating to AI-ready systems often requires overhauling existing architectures, which disrupts operations and demands substantial investment. 
• Global Competition & Infrastructure Gaps: Competition from Philippines, Vietnam, and Eastern Europe in AI challenges India’s cost advantage. 
  • Limited high-performance computing, advanced research facilities, and AI infrastructure slow innovation, increase reliance on foreign cloud services, and raise data sovereignty concerns.  
  • Initiatives like the IndiaAI Mission aim to strengthen infrastructure, yet India continues to lag behind global leaders. 

How can India's IT Sector Effectively Harness the Potential of Artificial Intelligence? 

• Government-Industry Collaboration & Reskilling: The government should partner with the private sector to build AI computing infrastructure, including high-performance GPU data centers. 
  • It should facilitate access to large, high-quality datasets for AI training, exemplified by platforms like AIKosh under the IndiaAI Mission. 
  • Nationwide AI skilling missions in AI, machine learning, and advanced software development are essential to align workforce capabilities with industry needs and global ethical standards. 
• Driving AI-Led Product Innovation: Indian IT firms should leverage AI to enhance productivity, moving from traditional service-based models to creating proprietary AI-powered enterprise solutions, cloud services, and cybersecurity products. 
  • For instance, Ola’s AI venture, Krutrim, is developing its own cloud platform. 
• Promoting AI Research through PPP: Encourage PPP for AI research, intellectual property creation, and the development of specialized AI hubs. 
  • The government should prioritize funding deep-tech AI startups that focus on foundational, high-tech solutions. 
  • A recent allocation of Rs 10,000 crore under the Fund of Funds scheme marks a significant step in this direction. 
• Towards Ethical and Explainable AI: Establish robust AI ethics, data privacy, and bias mitigation standards. 
  • Government policies should incentivize AI R&D, startup growth, and encourage IT firms to become strategic AI solution partners globally. 
  • Also, promote the use of explainable AI (XAI) to build trust with clients and regulators. 

Conclusion 

AI is a catalyst for reinvention, not a threat, for the Indian IT sector. The industry must shift from manpower-intensive outsourcing to knowledge-driven, AI-powered innovation. Firms that embrace change, invest in talent transformation, and position themselves as strategic AI partners will shape India’s technological leadership in the coming years. This vision should be a core theme at the AI Impact Summit, New Delhi, 2026.  

Drishti Mains Question:

Examine the impact of AI on the IT sector. What are the opportunities and challenges, and how can India leverage AI for sustainable growth?

UPSC Civil Services Examination Previous Year Question (PYQ)

Prelims:

Q. With the present state of development, Artificial Intelligence can effectively do which of the following? (2020)

1. Bring down electricity consumption in industrial units 
2. Create meaningful short stories and songs 
3. Disease diagnosis 
4. Text-to-Speech Conversion 
5. Wireless transmission of electrical energy 

Select the correct answer using the code given below:

(a) 1, 2, 3 and 5 only   

(b) 1, 3 and 4 only  

(c) 2, 4 and 5 only   

(d) 1, 2, 3, 4 and 5  

Ans: (b)

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Mains:

Q. Introduce the concept of Artificial Intelligence (AI). How does Al help clinical diagnosis? Do you perceive any threat to privacy of the individual in the use of AI in healthcare? (2023)