SoftBank is exploring acquisitions in India’s IT and business process outsourcing (BPO) sectors to enhance AI integration in service delivery, according to two people aware of its plans.

The Japanese conglomerate, led by CEO Masayoshi Son, recently attempted to acquire BPO firm AGS Health in a US$1 billion deal, but Blackstone secured the acquisition.

SoftBank is reportedly in talks with other firms, including WNS Global, as part of its AI-driven strategy.

India offers an opportunity for SoftBank to push AI adoption in outsourcing, especially as the country lacks foundational AI models like those from OpenAI or Anthropic.

The company is targeting small to mid-sized IT services firms in areas such as financial services, healthcare, and legal.

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🔗 Source: The Economic Times

🧠 Food for thought

1️⃣ SoftBank’s strategic shift signals broader AI industry consolidation

SoftBank’s move from being a venture investor to a direct acquirer of IT and BPO assets represents a significant evolution in their India strategy.

Since 2011, SoftBank has invested approximately $8 billion in Indian startups, primarily focusing on growth-stage consumer technology companies rather than acquisitions1.

This pivot mirrors global trends where tech giants are increasingly acquiring established service businesses to integrate AI capabilities, rather than building new AI-first companies from scratch.

By targeting established IT/BPO companies with existing client relationships and operational scale, SoftBank is pursuing a different path to AI value creation than their previous investment strategy that focused on consumer internet disruption.

2️⃣ India’s BPO industry faces an AI-driven transformation with competing job narratives

India’s $250 billion outsourcing industry employs approximately 5.4 million people and stands at a critical inflection point as AI reshapes the sector2.

While some predict catastrophic job losses—with Stability AI’s founder suggesting the “complete destruction” of India’s BPO sector by 2025—industry data presents a more nuanced picture3.

NASSCOM reports indicate that while AI might eliminate 20% of traditional BPO roles, it could create 40% more jobs in emerging domains like data analytics, content creation, and AI model training4.

The industry is already shifting from cost arbitrage to value creation, with many firms implementing AI-powered tools for chatbots, predictive analytics, and sentiment analysis to enhance rather than replace human agents5.

SoftBank’s interest in acquiring and transforming these businesses suggests they see significant untapped value in combining AI capabilities with India’s established service delivery infrastructure, potentially creating a new competitive advantage in global AI services.

3️⃣ AI acquisition strategy reveals gaps in India’s foundational AI capabilities

SoftBank’s approach of acquiring IT/BPO firms to integrate AI highlights a critical gap in India’s AI ecosystem: the lack of homegrown large-scale AI foundational models comparable to OpenAI or Anthropic.

Despite India’s robust software engineering talent, the country contributed significantly fewer papers to top AI conferences compared to the US and China as of 2018, reflecting historical underinvestment in fundamental AI research6.

India’s traditional strength in IT services hasn’t translated to leadership in AI model development, with the government only relatively recently prioritizing AI through national initiatives and task forces7.

This acquisition strategy effectively combines SoftBank’s access to cutting-edge AI technology (through partnerships like the one with OpenAI) with India’s operational scale and domain expertise in business processes.

The potential $1 trillion AI contribution to India’s economy by 2035 predicted by Accenture may depend less on developing indigenous AI models and more on effectively implementing and scaling AI within existing industry structures, which aligns with SoftBank’s acquisition strategy8.

Recent SoftBank developments

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