The Silicon Migration: How Technology Is Rewriting South Asia's Economic Geography

By Muhammad Ali Abbas

In the glass towers of Bangalore’s Electronic City, an entire generation of Indian engineers built their careers on a simple promise: their talent would bridge the gap between Western innovation and Eastern execution. For two decades, this compact held firm. Indian IT services companies became the world’s back office, processing the digital ambitions of Fortune 500 firms at a fraction of Western labor costs. The model was so successful it created its own mythology, the Indian IT miracle that lifted millions from poverty and transformed a postcolonial economy into a global technology powerhouse.

But promises, even those written in code, can expire.

During my research into the state of consulting while writing The Final Chapter of the Consulting Century, I realized that the repercussions of the shrinking industry hit home. CodeNinja, a company thoroughly entrenched within the South Asian market, provides a unique window into the fate of the industry in the region.

India long dominated global IT sourcing, its outsourcing and consulting sector powering both corporate efficiency and social mobility. Today, those foundations are eroding. Artificial intelligence is absorbing senior engineering roles, algorithms are replacing entry-level jobs, and automation has undercut the labor-cost advantage that once built empires.

At the same time, new hubs such as Ho Chi Minh City, Manila, Dhaka, and Lahore are seizing the moment. For these late entrants, disruption offers a chance to bypass incumbents and design models attuned to the next phase of global knowledge work.

The paradox is striking. The very technologies that fueled India’s ascent are now reshaping its future, threatening obsolescence for incumbents while creating unprecedented possibilities for others.

The Architecture of Disruption

The Pyramid’s Fatal Flaw

The Indian IT services model relied on the pyramid: a handful of senior architects overseeing vast pools of junior developers. This structure maximized profits and scaled delivery, but it also created massive vulnerability to automation.

The International Labour Organization has estimated that up to 69 percent of existing jobs in India face significant automation risk, with the IT sector among the most exposed (ILO 2023). Entry-level roles, once the foundation of the pyramid, are being eroded by AI systems capable of handling coding, testing, and basic analysis.

If algorithms eliminate even half of junior-level tasks, the leverage that sustained profitability collapses. Firms once requiring 100 junior analysts may now need only 40, destabilizing career pathways and compressing margins across the industry.

The Legacy Infrastructure Trap

India’s success has become its constraint. Tata Consultancy Services, Infosys, and Wipro together employ over 1.5 million people. Their operations are organized around training campuses, hierarchical management, and standardized processes optimized for a pre-AI world. Restructuring these behemoths is like performing surgery on a moving train.

Growth stagnation signals the strain. The Reserve Bank of India has reported declining export growth in software services since 2022, while hiring freezes and tighter qualification filters have become the new normal (RBI 2024). What once looked like unstoppable momentum now resembles institutional inertia.

This is the innovator’s dilemma at national scale. The very investments that made India successful, including training, process rigor, and standardized operations, now weigh against the adoption of AI-native business models.

The Emergence of AI-Native Challengers

While India manages legacy constraints, newer markets are building service capabilities for the AI era from the ground up.

Vietnam: Digital Dragons

Vietnam illustrates the leapfrogging dynamic. The World Bank has reported that Vietnam’s digital economy is growing at an annual rate exceeding 20 percent, fueled by government-backed AI education programs and expanding technical universities (World Bank 2023). Its developer population, dominated by Gen Z, entered the workforce during the AI revolution, not before it.

Labor costs remain 30 to 50 percent lower than in India, but the real advantage is cognitive. Vietnamese developers treat AI tools as native to their workflows, enhancing productivity in ways incumbents struggle to replicate.

Philippines: The Proven Pivot

The Philippines tells a parallel but distinct story. With 1.7 million employees in IT and business process management, it already operates at scale. The Asian Development Bank has noted that the Philippines’ services exports grew by 9 percent in 2024, outperforming regional peers (ADB 2024).

Unlike India, the country specialized early in customer service and process outsourcing rather than pure software development. This creates different vulnerabilities but also new opportunities. Filipino firms are experimenting with hybrid models where AI manages repetitive tasks while humans preserve cultural nuance and client trust.

Pakistan: The Demographic Dividend

Pakistan represents perhaps the most intriguing long-term play. With 60 percent of its 240 million people under 30, the country possesses one of the youngest populations in Asia. UNESCO has reported that Pakistan produces 30,000 computer science graduates annually, a figure set to rise with expanding higher education enrollment (UNESCO 2023).

Pakistan’s IT exports surpassed $3.9 billion in 2024, growing at over 25 percent annually (SBP 2024). The country is in a state to benefit from this technological shift, given its history of leapfrogging technological eras altogether, we saw this in telecommunications, as the country bypassing legacy landline networks to adopt mobile broadband directly. This cultural readiness for technological skipping may again position Pakistan to exploit AI-native opportunities.

Bangladesh: The Quiet Contender

Bangladesh is the underestimated player. Its ICT sector employs more than 750,000 professionals and benefits from a thriving freelance ecosystem. The International Trade Centre has ranked Bangladesh among the top three countries worldwide for financial attractiveness in IT outsourcing, alongside India and the Philippines (ITC 2024).

The World Bank has projected annual growth of 12 percent in Bangladesh’s digital services sector through 2029 (World Bank 2024). With lower structural inertia than India, it can adopt proven AI strategies from neighbors without incurring the costs of experimentation.

The Technology Paradox: Destruction and Creation

AI is simultaneously destroying and creating opportunity. In India, automation threatens millions of jobs, while in emerging markets it lowers barriers to entry and democratizes capabilities.

The Democratization of Intelligence

Artificial intelligence makes advanced analysis, modeling, and development accessible to anyone with basic training. For Pakistan and Vietnam, this means a junior developer can rival the productivity of a senior engineer in India at a fraction of the cost.

But this is not merely cost arbitrage. AI-native firms are redesigning organizational structures around hybrid workflows where humans and machines collaborate rather than compete.

The Unbundling of Expertise

Traditional consulting bundled knowledge, analysis, project execution, and legitimacy. AI unbundles these components. Knowledge is commoditized when large models can surface insights instantly. Analysis loses pricing power when algorithms perform in seconds. What remains valuable are project management, contextual intelligence, and institutional trust.

This shift opens opportunities for firms that specialize. Vietnam can dominate AI-enhanced delivery, Pakistan can scale analytics talent, the Philippines can leverage cultural fluency in client interactions, and Bangladesh can build on its financial attractiveness.

The Geopolitical Dimension

The redistribution of opportunity across South Asia has geopolitical implications.

Western companies that once concentrated outsourcing in India now diversify across multiple markets to mitigate concentration risk. The International Monetary Fund has noted this trend of distributed investment in digital services, with multinational firms spreading operations across Vietnam, Bangladesh, and Pakistan to balance exposure (IMF 2024).

This diffusion also erodes the old division between “innovation centers” in developed economies and “execution centers” in developing ones. AI tools enable South Asian markets to compete for higher-value projects requiring both technical expertise and contextual judgment.

The Human Cost

Behind these shifts lie human consequences. Millions of Indian professionals in their 30s and 40s face obsolescence of skills they built careers upon. Mid-career workers, squeezed between younger AI-native entrants and senior managers, bear the brunt of disruption.

For emerging markets, delay carries its own cost. Every year without AI investment risks ceding ground to neighbors. Governments face urgent policy choices: invest in AI-native education, infrastructure, and training, or risk being locked into declining market segments.

Strategic Implications

The emerging consulting ecosystem will differ fundamentally from the old pyramid model.

· From scale to specialization: success will flow to firms combining human intelligence with AI-native processes.

· From outsourcing to partnership: relationships will evolve from vendor-client to integrated capability-building.

· From arbitrage to differentiation: competitive advantage will rest on cultural fluency, contextual expertise, and strategic focus.

India must choose between reinvention and decline. Emerging markets must act with speed and discipline to seize opportunity without inheriting incumbents’ structural vulnerabilities. For Western firms, the imperative is portfolio diversification across multiple South Asian markets.

Conclusion: The Migration Continues

The great silicon migration that began with manufacturing has moved to services. But this time, the forces are not simply cost or scale. They are about intelligence, both human and artificial, and the ability to combine them effectively.

The winners will not be those who replicate the Indian IT model but those who invent AI-native pathways tailored to their strengths. The migration is still underway, and its destination is not predetermined. The future belongs to those who can write it.

References

Asian Development Bank (ADB). 2024. Asian Development Outlook 2024: Financing Asia’s Transition. Manila: Asian Development Bank.

International Labour Organization (ILO). 2023. Global Employment Trends for Youth 2023: Technology and the Future of Jobs. Geneva: International Labour Organization.

International Monetary Fund (IMF). 2024. World Economic Outlook: Regional Perspectives for Asia and Pacific. Washington, DC: International Monetary Fund.

International Trade Centre (ITC). 2024. Global Services Trade and Outsourcing Competitiveness Report 2024. Geneva: International Trade Centre.

Reserve Bank of India (RBI). 2024. Annual Report 2023–24. Mumbai: Reserve Bank of India.

State Bank of Pakistan (SBP). 2024. Annual Report 2024: The State of Pakistan’s Economy. Karachi: State Bank of Pakistan.

UNESCO. 2023. Education and Skills for Jobs: South Asia Regional Report 2023. Paris: UNESCO.

World Bank. 2023. Vietnam Digital Economy and Development Report 2023. Washington, DC: World Bank.

World Bank. 2024. Bangladesh Digital Economy Assessment 2024. Washington, DC: World Bank.