AI To Replace IT and BPO Firms Within 5 Years, Warns Tech Billionaire Vinod Khosla

Mumbai, February 16: Tech billionaire and venture capitalist Vinod Khosla has issued a stark warning regarding the future of white-collar employment, predicting that artificial intelligence (AI) could lead to the near-total disappearance of IT services and business process outsourcing (BPO) firms within five years. Speaking ahead of the India AI Summit, the Sun Microsystems co-founder noted that the rapid evolution of AI systems is nearing a point where they can outperform humans in most economically valuable tasks.

Khosla characterised the current advancement in AI as a "once-in-a-generation shift" that differs fundamentally from previous technological revolutions like the internet or smartphones. While past shifts created new platforms for business, Khosla argues that AI is now replicating cognitive labour itself, moving beyond digital assistance to become autonomous "AI workers" capable of handling complex professional duties. Salesforce Layoffs 2026: Tech Giant Lays Off Nearly 1,000 Employees From Agentforce AI and Marketing Teams Amid Executive Shakeup.

Disruption of Expertise-Driven Professions

The impact of AI is expected to extend far beyond entry-level data roles. Khosla predicted that expertise-driven professions, including accounting, law, medicine, and chip design, face deep disruption over the next decade or two. As AI-driven solutions become more sophisticated, the traditional reliance on human expertise for these knowledge-based services is likely to diminish, leading to a radical restructuring of the global labour market.

However, this shift also presents an opportunity to democratise essential services. Khosla highlighted that high-quality healthcare, tutoring, and legal support could become widely accessible at a minimal cost. Furthermore, he noted that robotics is trailing cognitive AI by only a few years, suggesting that physical work across various industries will also see significant automation in the near future.

Implications for India's IT and BPO Sectors

For India, the warnings carry significant weight as the IT and BPO sectors have long been primary engines for white-collar employment. Khosla urged Indian stakeholders to pivot away from traditional labour-arbitrage models, which rely on lower costs for human labour, and instead focus on building and exporting AI-native products. He suggested that India's large young workforce should prioritise developing AI-driven solutions for global markets.

The venture capitalist emphasised that the economic outcome of this transition will depend heavily on policy choices. Countries that move quickly to establish sovereign AI capabilities and foundational models tailored to their national needs will be better positioned to compete in a landscape currently dominated by the United States and China.

Concerns Over Economic Inequality

While AI promises dramatic productivity gains, Khosla cautioned that large-scale job displacement could widen economic inequality. Without proactive measures to ensure that productivity gains are broadly shared, the transition could fuel political backlash and social instability. The speed of this transformation is expected to outpace the current expectations of most governments and businesses worldwide. Tech Layoffs 2026: Amazon, Citi, Pinterest and Others Reduce Workforce by Laying Off Thousands of Employees.

The warning underscores the urgent need for a strategic shift in how nations approach education and workforce training. As traditional roles vanish, the focus must move towards high-value creation within the AI ecosystem to mitigate the risks of widespread unemployment in formerly stable sectors.

(The above story first appeared on LatestLY on Feb 16, 2026 11:05 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).