KEY POINTS
- AI is cutting middle-management jobs in India.
- Companies are mixing AI with human roles.
- Infrastructure and ethics remain big hurdles.
Artificial Intelligence (AI) is no longer just a fancy technology used in tech parks or big multinational corporations. Today, AI is transforming how companies around the world, and especially in India, are built and managed. Earlier, most businesses followed a pyramid structure: a few decision-makers at the top, many middle managers in the center, and a large workforce at the bottom. But this model is being replaced by something new, the “hourglass model.”
In this hourglass model, AI takes over many of the tasks that used to be done by middle managers, such as coordinating between teams, analyzing data, and making routine decisions. This shrinks the middle layer. At the top, leaders focus on strategy. At the bottom, workers team up with AI systems to perform tasks more quickly and efficiently. This new structure allows companies to operate in a more streamlined and cost-effective way.
The Global Shift to AI-Powered Organizations
Across the world, countries like the United States and those in Europe are adopting this hourglass model rapidly. A Gartner report predicts that by 2026, 20% of companies in these regions will reduce more than half of their middle management positions. The driving force is high labor costs, for example, the average hourly wage in the U.S. is around $35, compared to just $1 to $2 in India, as per data from the International Labour Organization. This makes automation a much more attractive solution for Western companies. They are using AI not just for operations, but also for monitoring employee performance, onboarding new hires, and improving customer service.
According to a McKinsey Global Institute report, AI could add as much as $13 trillion to the global economy by 2030. Companies that embrace AI could boost their productivity by as much as 25%. For Indian companies, especially Small and Medium-sized Enterprises (SMEs), this productivity boost could be a game-changer, offering a chance to compete with global firms.
India’s Unique Journey with AI
While India is showing interest in AI, the path here is different from that in the West. India is still in the early stages of adopting AI across all sectors. According to the International Monetary Fund (IMF)’s AI Preparedness Index, India ranks 72nd globally, with a score of 0.49. This is significantly behind countries like the U.S. (0.77) and Singapore (0.80). The reasons include poor digital infrastructure in rural areas, patchy internet connectivity, and a workplace culture that still relies heavily on hierarchy.
However, cities like Bengaluru, Hyderabad, and Pune are rapidly becoming hubs for AI research and innovation. Many startups and tech giants based in these cities are investing in AI for everything from customer service to warehouse management. Companies like Flipkart and Reliance Jio use AI to predict customer preferences and ensure timely deliveries. But unlike in the West, these firms have not entirely done away with middle managers. India’s market is vast, multilingual, and culturally diverse, making human oversight essential. Also, because wages are lower in India, there is less financial pressure to automate every role.
India is not blindly following the Western model. Instead, it is creating a hybrid version of the hourglass model that blends AI’s benefits with traditional organizational strengths. The result is greater efficiency without completely disrupting existing work cultures.
In manufacturing hubs like Surat, textile companies are using AI to forecast fabric demand. This helps reduce waste and increase profits. In IT companies, AI-powered tools are speeding up coding and freeing engineers to focus on innovation. The Nielsen Norman Group (NNG) found that generative AI tools can improve task performance by up to 66%. This gives Indian IT firms a strong edge in global markets.
The pharmaceutical sector also showcased AI’s power during the COVID-19 pandemic. AI helped manage supply chains, track vaccine distribution, and even support R&D for new treatments. Banks have launched AI-based chatbots to assist customers 24/7, and HR teams use AI for payroll management and employee engagement. At the same time, new job roles such as AI engineers, data scientists, and data ethicists are emerging. According to Deloitte and Nasscom, India will need about 1.25 million skilled professionals in AI and data-related roles by 2027.
Despite the benefits, India faces several challenges in fully embracing AI. The biggest concern is job displacement. According to a Pew Research report, about 19% of U.S. workers are in jobs highly exposed to AI. Globally, up to 800 million jobs could be displaced by 2030 due to automation, says McKinsey. In India, middle managers and less-skilled workers, especially those without college degrees, are the most vulnerable. If not handled properly, this could increase unemployment and economic inequality.
To address this, 94% of Indian companies surveyed by LinkedIn say they plan to reskill their employees. However, implementing such large-scale training is a massive challenge. Older employees, workers in remote regions, and those unfamiliar with digital tools may struggle to keep up.
Another major issue is ethics. AI systems can sometimes produce biased results if they are trained on faulty data. In a country as diverse as India, biased AI could result in unfair decisions, for example, denying loans or job interviews based on flawed algorithms. A survey by ISACA found that 79% of Indians are concerned about their personal data being misused. Though India’s Digital Personal Data Protection Act, 2023, is a good start, it is still in the early stages and needs strong enforcement.
Infrastructure remains another hurdle. Over 65% of Indians still live in rural areas where internet access is unreliable or missing. Without a strong digital infrastructure, AI adoption will be limited to urban centers. Moreover, setting up AI systems can be costly, and not all Indian companies, especially small businesses, can afford it.
Cultural resistance is another roadblock. Many Indian businesses are family-run and operate with a top-down structure. Introducing AI often means changing how decisions are made and reducing the influence of senior managers, which can lead to resistance from within.
To tackle these challenges, India must take several steps. First, reskilling the workforce should be a national priority. Programs like Skill India can offer digital courses on AI, data analysis, and problem-solving, especially targeted at youth and rural workers. Second, Indian businesses should adopt a hybrid approach to AI, letting machines handle data and routine tasks while keeping humans in charge of complex and culturally sensitive decisions.
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Third, India needs strong ethical guidelines for AI. These should be modeled on global standards like those from the OECD, and must ensure fairness, transparency, and privacy. Fourth, collaboration with foreign AI companies and research institutions can bring technical know-how, which can be adapted for Indian conditions, such as low-cost AI tools for SMEs. Lastly, AI must be seen not just as a tool but as a long-term strategic journey. Businesses must continuously monitor changes in cybersecurity, regulation, and global AI trends.
A Unique Indian Model of AI Adoption
India’s AI revolution will not look exactly like the West’s, and it shouldn’t. It will be a unique blend of technology and tradition, using the power of AI while respecting India’s cultural and economic diversity. A study by the Centre for Economic Policy Research found that Japan is seeing a 0.5-0.6% productivity growth due to AI. India, with its young population and growing tech sector, can aim for the same or even more.
For Indian companies, this is more than a passing trend. It’s a golden opportunity to reimagine how businesses are run, blending human intelligence with artificial intelligence to create smarter, fairer, and more efficient organizations that can thrive in the global economy.
As we step into the future, the real question is not whether India can adopt AI, but how well we can shape it to serve our people, from the factory worker in Surat to the coder in Bengaluru, and ensure that this transformation lifts everyone, not just a few.
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