DeepSeek’s low-cost, high-performance AI disrupts global markets, challenging India’s IT sector built on cost-effective labor. As AI bypasses traditional advantages, India must increase R&D, transform its workforce, invest in quantum computing, and adopt a balanced economic strategy to maintain competitiveness in the evolving AI-driven global economy, ensuring long-term technological leadership.
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DeepSeek has shaken up the global tech industry and stock markets with its low-cost artificial intelligence (AI) model.
It is a Chinese AI company founded in 2023 and headquartered in Hangzhou, has emerged as a disruptor in the global AI market.
Despite originating from the financial trading sector, DeepSeek has developed generative AI models that match the performance of OpenAI’s ChatGPT while operating at lower costs.
DeepSeek’s success originates from its innovative approach to AI development, utilizing techniques like mixed expert architecture (MoE) and dynamic knowledge distillation to reduce computational requirements.
India’s IT sector, traditionally built on cost-effective labor and English-language proficiency, are now facing challenges from AI-driven automation. Generative AI models like those developed by DeepSeek can replace repetitive, low-value tasks that formed the foundation of India’s competitive advantage in global IT services.
The threat to India’s IT dominance comes not just from cost efficiency but from the elimination of traditional barriers to entry. AI models can now bypass language and skill requirements, which make India’s historical advantages less relevant in the new AI-driven economy.
Current gross domestic expenditure on R&D remains below 1% of GDP, as compared to China’s 2.43%, this gap requires urgent policy intervention to boost domestic R&D capabilities in AI and related technologies.
India needs to shift from a labor-cost advantage to a productivity advantage, by developing high-skilled talent that can enhance AI capabilities rather than being replaced by them.
India must increase investments in quantum research, both through government and private sector collaboration.
A balanced approach that promotes growth in both manufacturing and services sectors will create a more resilient economy capable of resisting technological disruptions.
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PRACTICE QUESTION Q. DeepSeek, frequently seen in news recently, is best described as: A) A new cryptocurrency platform aiming to rival Bitcoin. B) An Artificial Intelligence (AI) chatbot developed in China. C) A global initiative for cybersecurity cooperation led by the United Nations. D) A social media platform focused on professional networking in the AI industry. Answer: B Explanation: DeepSeek is an AI chatbot developed by the China-based company High-Flyer. It has gained attention for its advanced natural language processing and content generation capabilities. |
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