Artificial Intelligence (AI) has outgrown its role as a mere task automator — it’s now reshaping how Indian companies are built and run. The old pyramid model, with its top tier of bosses, a thick layer of middle managers, and broad base of workers, is giving way to something new — an hourglass. In this setup, AI shrinks the middle by taking over coordination and decision-making, letting leaders at the top focus on strategy while the bottom diversifies into a mix of people and smart tools.
For India, this shift is a double-edged sword, brimming with potential yet fraught with hurdles. Getting it right could propel Indian businesses onto the global stage while getting it wrong could leave them trailing.
The hourglass model
Imagine a company where top executives plan for the future without worrying about the nitty-gritties of the everyday workspace because AI now handles schedules, tracks performance, and crunches data for decisions. The middle level, once crowded with managers, thins out as AI steps in, cutting the need for human oversight. At the base, frontline workers, specialists, and AI systems team up using real-time insights to get the job done more efficiently. It’s a sleeker and quicker way to work, and is powered by AI’s ability to sync operations, adapt on the fly, and pair human ingenuity with machine precision. McKinsey estimates that AI could pump trillions into the global economy, with firms seeing productivity rise by up to 25% when they embrace it. Small and Medium-sized Enterprises (SMEs), India’s economic spine, stand to gain big from that 25% productivity lift. That’s the lure that AI promises — efficiency and flexibility.
In European countries as well as the U.S., the hourglass model is taking hold fast. A Gartner report forecasts that by 2026, one in five companies there will use AI to slash over half their middle managers, saving costs while boosting output. High wages — around $35 an hour in the U.S. versus $1-$2 in India, according to the International Labour Organization — make automation a smart bet. Big players use AI to monitor workers or streamline onboarding, pushing for flatter, tech-savvy setups.
Is India adapting?
India’s path is its own. Cities like Bengaluru and Hyderabad pulse with AI innovation, yet India ranks 72nd on the International Monetary Fund’s AI Preparedness Index with a score of 0.49, far behind the U.S. (0.77) or Singapore (0.80). The lag stems from uneven infrastructure — rural areas lack the connectivity urban hubs enjoy — and a cultural lean towards hierarchy that’s hard to shake.
Indian firms aren’t diving fully into the hourglass; they’re testing it with a hybrid spin. E-commerce leaders like Flipkart and Reliance Jio use AI to predict buying trends or iron out delivery kinks, but they keep layers of managers to tackle India’s diverse, multilingual markets. Lower labour costs ease the pressure to cut middle roles, and our respect for authority slows the shift to flatter organisational structures. A report by World Business Culture highlights how Indian businesses echo our society’s top-down ways, making big change a tough sell. This hybrid tack isn’t a retreat — it’s a strategic play, blending AI’s perks with what already works.
The perks of such blending are real and enticing. Efficiency tops the list. A Surat textile maker could use AI to forecast fabric demand, slashing waste and boosting profits. Innovation follows close behind. AI tools speed up coding for tech firms, freeing staff to come up with new solutions. The NNG Group found that generative AI boosts task performance by 66%, a hint of what it could do for the Indian IT sector. Flexibility’s another win — pharmaceutical companies leaned on AI during the pandemic to navigate supply chain chaos, showing its value in difficult times. Add in better customer and employee experiences — banks roll out 24/7 chatbots, payroll automation frees up staff duties — and you’ve got a compelling case. Additionally, it also brings in an array of new roles, such as AI experts and data ethicists, with demand set to hit 1.25 million by 2027, per Deloitte and Nasscom.
Myriad challenges
But the road’s not all rosy. Jobs hang in the balance, especially for middle managers and the less skilled. Pew Research pegs 19% of U.S. workers with high exposure to AI, and globally, up to 800 million jobs could shift by 2030. In India, where steady work props up millions, this could widen gaps — non-graduates and older workers would face the brunt. While LinkedIn states 94% of Indian firms plan to reskill their workers, it’s going to be a tall order.
Ethics throw up another snag. AI can stumble with bad data, a worry in our diverse nation — think skewed loan calls or hiring picks. Another worry is transparency; 79% of Indians dislike their data being sold off, as per ISACA. While the Digital Personal Data Protection Act, 2023 aims to curb this, it’s still finding its feet.
Infrastructure’s a sticking point too. With 65% of Indians in rural areas and many offline, AI’s reach is cramped. Moreover, bringing in AI infrastructure isn’t cheap, and not every firm will be able to afford it. Culture adds a twist. Our love for hierarchy, especially in family businesses, jars with the hourglass push. Flattening things risks pushback from workers and bosses wedded to the old ways. It’s not just technology — it’s people as well.
What should be done?
Start with reskilling — train staff in AI basics, data skills, and problem-solving; Skill India’s digital courses are a launchpad. Next, adopt a hybrid model — use AI for analytics or customer chats, and keep humans for the big decisions. Then, lay down ethical guidelines — set rules for fair, open AI, with checks to dodge bias and build trust, as per the OECD guidelines. Team up with Western firms for know-how, tailoring it to India’s needs, like affordable tech for SMEs. Additionally, know that AI is a journey, and not a fix; track cyber risks and regulatory shifts to keep ahead.
India’s hourglass won’t ape the West — it’ll be our own blend, fusing AI’s power with our economic and cultural roots. By doing so, we could lead in AI-driven business. A Centre for Economic Policy Research study flags a 0.5-0.6% productivity bump from AI in Japan — India could see the same. It’s about time we start syncing tech with human grit and India’s unique rhythm. For our firms, this should not be just a trend — it’s a chance to rethink work, value, and how 1.4 billion of us shape the future.
Venkat Ram Reddy Ganuthula and Krishna Kumar Balaraman are faculty at IIT Jodhpur. The views expressed are personal.
Published – May 19, 2025 08:30 am IST