🧠 Food for thought

Implications, context, and why it matters.

A viral report fueled fears of a near-crisis

• Raghuram Rajan responded to a widely shared memo from Citrini Research that imagined a 2028 “global intelligence crisis” 1.
• The memo argued that AI coding agents, with marginal costs falling to near the cost of electricity, could erase India’s labor-cost edge in IT services 2.
• It speculated that disruption could push the rupee down 18% against the dollar by 2028, and that by Q1 2028 the IMF would have started “preliminary discussions” with New Delhi 2.
• As the memo spread, Indian IT shares sold off, taking the group to a 30-month low 3.
• Jefferies added pressure with a sector downgrade, cutting price targets by as much as 33% over worries about AI hitting revenue and margins 4.

AI is changing work in India’s tech sector

• Rajan said change will take time because many firms still lack large-scale AI adoption, and he urged India’s software companies and employees to “retool and reskill really fast” while adapting over time.
• His view that higher-end engineering can grow aligns with the rise of Global Capability Centers (GCCs), which are in-house tech and R&D hubs built by multinationals in India 5.
• India is estimated to host more than 1,700 GCCs, with around 1.9 million direct employees 6.
• Many GCCs now aim to function as global AI innovation hubs, moving up the value chain from execution to strategy 6.
• AI may squeeze routine junior tasks, yet it also boosts hiring for AI product engineering, model risk and governance (the policies and controls for how AI models are used and monitored), security, plus domain-led transformation inside these centers 6.
• Together, these trends point to a longer-term shift from outsourced services toward in-house centers that carry higher-value product, R&D, and innovation mandates for multinational parent firms 6.