In this insightful long read, Nisha Holla, a Visiting Fellow at the Observer Research Foundation, describes how AI is transforming services that were traditionally provided by human beings into a software product. Ms Holla’s piece then goes on to explore the consequences of this for businesses and for the labour market. She writes: “…with the advent of artificial intelligence (AI), a fundamental shift is underway: human-led services are becoming AI-led software. Instead of hiring large teams of human specialists, businesses will increasingly incorporate AI-powered tools and platforms that automate complex tasks once thought impervious to automation and digitalisation.
The AI-driven shift…raises several critical questions about what happens to human labour when AI replaces labour-intensive services, how AI-driven automation will redefine the relationship between enterprises and the software they adopt, and what new opportunities will emerge…where enterprise-grade AI takes centre stage.”
Ms Holla says that in some professions this shift is already upon us: “AI tools like Harvey AI are transforming the legal and compliance sector by analysing case law and generating legal briefs, essentially replacing human research assistants. The customer support ecosystem that once required large human teams in call centres now handles significant query volumes daily with AI chatbots and virtual agents. Tools like OpenAI’s Code Interpreter catalyse industries operating on data analysis and business intelligence by incorporating AI-driven analytics that replace manual data wrangling. Unlike traditional SaaS, which assists human workers, these AI-driven tools replace labour-intensive processes entirely and generate outcomes with minimal human interventions. ‘Services as Software’ therefore eliminates the human + SaaS unit that serves outcomes and replaces this unit with a full-stack AI-led automation that delivers the same outcomes.”
She goes on to give several other examples where AI is replacing humans in providing services. Of particular interest to those of us investing in India is the impact of this shift on the call centre industry, historically a significant source of middle-class jobs: “Customer service and the end of call centres: For decades, outsourcing customer support to human agents dominated the customer service industry. Today, AI-powered voice assistants and chatbots are disrupting the space. Bank of America’s Erica AI handles over 2 million customer interactions daily, surpassing 2 billion interactions since its launch in 2018, dramatically reducing reliance on human agents. Airlines and e-commerce companies are increasingly using AI chatbots to resolve queries without human intervention. As generative AI conversational agents improve, which they are at an unprecedented pace, entire call centres could be replaced with AI-driven agents, making routine customer service a fully automated function with higher-order management entailing human effort.”
Ms Holla says that this shifting of work from humans to AI agents will change the way companies are organised and how the (remaining) humans in the office are measured: “Businesses won’t simply replace SaaS with AI-powered tools; they will build the company’s processes and systems around these new systems. Instead of hiring marketing agencies, companies will use AI to generate dynamic marketing and advertising campaigns. Businesses will rely on AI-driven quality assurance and control instead of outsourcing software testing, Quality Assurance, and Quality Control. Instead of manual IT support, enterprises will deploy AI-driven monitoring and cybersecurity agents. AI agents will run Human Resource processes and travel bookings. Every business computer will host dedicated AI agents to monitor human productivity and run real-time coordination of enterprise resources, and calendars.”
So what will humans do in this brave new world? Ms Holla writes:
“AI oversight and governance will remain a human domain. AI systems must be monitored for ethical concerns, regulatory compliance, and bias correction. Humans will have to ensure responsible AI implementation.
Creativity and strategic thinking remain human domains. AI can generate insights, but human leaders and collaborators will drive innovation, interpret business contexts, and make strategic decisions.
Humans and AI will collaborate in specialised fields. Doctors will use AI for patient monitoring and diagnosis but will continue to oversee patient care. Lawyers will leverage AI for research but still handle litigation. Scientists will incorporate AI into research discovery, hypothesis generation, data analysis, and simulation but define research objectives and experimental paths.
Customer experience and relationship management encompass complex problem-solving and trust-building. AI cannot replace these functions but can handle transactional interactions and customer attention acquisition, while escalations will still require humans.”
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Note: The above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. The information provided is intended for educational purposes only. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India (SEBI) and is also an FME (Non-Retail) with the International Financial Services Centres Authority (IFSCA) as a provider of Portfolio Management Services. Additionally, Marcellus is also registered with US Securities and Exchange Commission (“US SEC”) as an Investment Advisor.
