The era of artificial intelligence (AI) is poised to revolutionize the customer service industry, potentially rendering the traditional call center model obsolete. This prediction comes from the visionary leader of Tata Consultancy Services (TCS), one of India’s preeminent IT giants.
K Krithivasan, the Chief Executive Officer of TCS, foresees a future where chatbots and other AI-powered solutions will soon take over the majority of tasks currently handled by human agents in call centers. In a candid interview with the Financial Times, Krithivasan confidently asserted that within a year’s time, there should be minimal need for incoming call centers as we know them today.
The crux of his argument lies in the rapid advancements in generative AI, a technology that can analyze a customer’s transaction history, anticipate their needs, and proactively address their concerns before they even reach out. This proactive approach, facilitated by AI, could render the traditional reactive model of call centers obsolete.
While Krithivasan acknowledges that job reductions have not yet materialized, he believes the widespread adoption of generative AI among TCS’s multinational clients will inevitably disrupt the call center industry across Asia and beyond. This disruption is poised to impact the millions of workers employed in back-office services and IT outsourcing, particularly in countries like India and the Philippines, which have historically been hubs for such operations.
TCS, a subsidiary of the venerable Tata conglomerate, boasts a staggering workforce of over 600,000 employees and generates nearly $30 billion in annual revenue. The company has already witnessed a surge in demand for generative AI projects, with its pipeline doubling quarter over quarter to reach a staggering $900 million by the end of March. Krithivasan anticipates this demand to continue escalating, potentially doubling again in the coming quarters.
However, amidst the hype surrounding generative AI, Krithivasan cautions against overestimating its immediate benefits. He believes the true impact of this technology will be realized over the long term, rather than expecting substantial returns within the next two to three quarters.
Contrary to the notion that AI will lead to job losses, Krithivasan argues that the world will require more technology talent, not less. India, with its vast population, is well-positioned to meet this growing demand, provided the country invests in workforce training and skill development.
Krithivasan highlights the need to enhance the employability of Indian graduates, as many lack the necessary skills required by the industry. TCS, which operates its own internal AI-skilling program, currently hires directly from only 10 to 15 percent of Indian colleges, suggesting a significant gap between academia and industry requirements.
To address this gap, Krithivasan proposes expanding TCS’s recruitment efforts to encompass a broader range of educational institutions, potentially reaching up to 50 percent of colleges. This initiative, he believes, will not only provide more employment opportunities but also equip the workforce with the technological expertise needed to meet the global industry’s demands.
While the prospects of generative AI appear promising, TCS and its competitors face challenges in the form of economic uncertainties stemming from inflation, geopolitical conflicts, and upcoming elections. These factors have led businesses in key markets to exercise caution when investing in new technology projects, resulting in a slowdown in revenue growth for IT services companies.
TCS’s annual currency-adjusted revenue growth declined to 3.4 percent in its last financial year, a significant drop from the 13.7 percent growth achieved in the previous year. Similarly, Infosys, another prominent Indian IT services company, reported flat annual revenue growth and forecasted muted sales growth of between 1 and 3 percent for the next financial year on a constant currency basis.
As the world grapples with the transformative potential of AI, the call center industry finds itself at a crossroads. The predictions from TCS’s leadership underscore the urgency for businesses and policymakers to adapt and equip their workforces with the necessary skills to thrive in this rapidly evolving technological landscape.
