AI and chatbots pose a threat to the call center industry, human operators

BENGALURU, India — In a bustling startup office in Bengaluru, developers at LimeChat are refining artificial intelligence chatbots designed to converse and message like humans. The company’s bold aim is to make traditional customer-service roles nearly obsolete, claiming its generative AI agents enable clients to cut staffing needs by up to 80% for every 10,000 monthly queries.

India, long regarded as the world’s back office for its low-cost, English-speaking workforce, now faces a technological upheaval as AI-powered systems begin replacing call-center and customer-support jobs. The shift is fueling growth for AI startups that promise reduced costs and greater efficiency, even as many consumers continue to prefer human interaction.

A Reuters investigation based on interviews with 30 executives, workers, recruiters, and government officials found that rather than slowing down AI adoption, India is accelerating it. Policymakers are betting that the transition will create new roles to absorb displaced workers. The stakes are high, as the outcome could determine whether AI-driven disruption becomes a model for development or a cautionary tale for emerging economies.

The global conversational AI market is expanding by 24% annually and is expected to reach $41 billion by 2030, according to consultancy Grand View Research. For India, where the IT sector contributes 7.5% of GDP, the government sees AI as an opportunity. In February, Prime Minister Narendra Modi said, “Work does not disappear due to technology. Its nature changes and new types of jobs are created.”

Still, concerns persist about the country’s readiness. Santosh Mehrotra, a former government official and visiting professor at the University of Bath, warned, “There’s no gameplan,” criticizing the lack of urgency in addressing AI’s potential effects on India’s young workforce.

Business process management — employing 1.65 million people in call centers, payroll, and data handling has seen hiring slow dramatically. Neeti Sharma, CEO of TeamLease Digital, said automation and digitalization have curbed job growth even as demand rises for AI coordinators and process analysts.

Among those affected is Megha S., a 32-year-old customer-service employee who lost her $10,000-a-year job in Bengaluru as her company introduced AI tools to evaluate sales calls. “I was told I am the first one who has been replaced by AI,” she said. “I’ve not told my parents.”

Former labor ministry secretary Sumita Dawra noted that while AI offers productivity gains and new employment avenues, India may need stronger social safety nets, such as unemployment benefits for displaced workers. A senior government official, however, told Reuters that AI would have little long-term effect on total employment.

Analysts remain cautious. Jefferies Investment Bank predicts India’s call centers could face a 50% revenue decline from AI adoption within five years, and a 35% drop for other back-office roles. India currently accounts for 52% of the global outsourcing market.

“The biggest impact is going to be on young students coming out of college,” said Pramod Bhasin, who launched India’s first call center for GE Capital in the 1990s. Yet Bhasin believes India could evolve from the “world’s back office” into its “AI factory” by supplying skilled automation engineers.

LimeChat’s co-founder Gupta said his firm’s technology has already automated 5,000 jobs nationwide, handling 70% of client complaints and targeting 90–95% automation within a year. “If you’re giving us 100,000 rupees per month, you are automating the job of at least 15 agents,” he said. The company’s revenue grew from $79,000 in 2022 to $1.5 million in 2024.

LimeChat’s competitors include Haptik, owned by Reliance, which says its AI agents “deliver human-like customer experiences” for $120 per agent, cutting support costs by 30%. Haptik’s revenue rose to nearly $18 million last year from under $1 million in 2020. “Brands are not investing in human agents and they want to deploy AI agents,” said Suji Ravi, a Haptik product manager.

For companies like Mamaearth, AI’s appeal lies in scalability. “Providing good customer support is make or break for us,” said Vipul Maheshwari, head of product and analytics at parent firm Honasa Consumer. “But can we infinitely scale my customer support team? Absolutely not.”

The transformation is also evident at The Media Ant, a Bengaluru-based advertising agency that cut 40% of its workforce after replacing its sales and call-center teams with AI bots. Founder Samir Chaudhary said a voice agent named Neha now handles client inquiries fluently in Indian-accented English. “Ask her out for a coffee and she will laugh it off,” he joked.

Still, AI deployment has limits. When a Reuters reporter asked a LimeChat-powered bot from Knya to verify claims about its medical products, it replied, “I am sorry, I don’t have enough information to answer your question.”

A recent EY survey of 1,000 Indian consumers found 62% made purchases influenced by AI recommendations, double the global average, but 78% still prefer human-assisted platforms.

As AI reshapes India’s technology landscape, training centers are adapting. In Ameerpet, a Hyderabad hub for IT education, institutes now emphasize AI courses such as data science and prompt engineering. “Recruiters are asking for students with basic AI skills,” said instructor Priyanka Kandulapati.

During a discussion with Indian startup founders last month, venture capitalist Vinod Khosla, co-founder of Sun Microsystems, offered a stark forecast: “All IT services will be replaced in the next five years. It’s going to be pretty chaotic.”