From pyramids to hourglasses: how AI can change Indian workplaces Premium

AI reshapes Indian companies, replacing middle managers with AI, boosting productivity, but challenges remain in job loss and ethics.

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.

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.

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.