Opendoor's India Exit Raises New Questions About AI and the Future of Outsourcing

Opendoor CEO Kaz Nejatian wrote a note to the employees. The note was very polite. It said things about the India team and how talented they are.. It also said something that is making a big impact in Silicon Valley and India:

"Our customers are in America and thats where our operational work belongs."

Opendoor is closing its offices in India. This is happening than two years after they opened offices in Chennai and Bengaluru. 250 Employees will lose their jobs. The company is moving these jobs back to the United States. They want to build teams that use Artificial Intelligence.

This decision is making people talk about whether Artificial Intelligence's changing the way companies work with other countries.

What is at stake for India

To understand why this is a deal we need to know what India has done. India is not a place where companies send work to save money. It is now the market for Global Capability Centers. These are special offices that big companies set up to handle things like technology, money and research. There are than 2,100 of these centers in India. They employ about 2.36 million people. Make nearly $100 billion every year.

Opendoor was a part of this. They only had 250 jobs in India.. If other companies do the same thing it could make a big difference.

What Opendoor actually said

Nejatian was careful with his words. He said the problem was not with the India teams work. The problem was something basic:

Customer proximity: Opendoors customers are in America so they want their work to be close to them

Artificial Intelligence teams: The company wants to use smaller teams that use Artificial Intelligence, not big teams that do manual work

Manual workflows: Opendoor had a big team in India to do manual work.. Artificial Intelligence is making it so they do not need to do as much manual work.

The company had 250 employees in India when they started "Opendoor 2.0" a few months ago. Some jobs already moved back to the US. Now all of them will.

The bigger picture

Opendoor has been trying to cut costs for years. The housing market in the US has been tough. Companies that buy homes online have been hit hard. The company had 1,042 employees globally at the end of year down from 1,470 the year before. They had employees outside of the US. 184 Employees, down from 342.

So the reason Opendoor closed its offices in India is not about Artificial Intelligence.. The way Nejatian talked about it and how fast it spread through Silicon Valley suggests that something bigger is happening.

What investors are saying

The reaction was fast and strong.

Sheel Mohnot, co-founder of Better Tomorrow Ventures said: "As Artificial Intelligence replaces work a lot of jobs will be lost in India."

Keshav Lohia, a venture capitalist at Emergent Ventures called it a " moment" for Artificial Intelligence operations. He said that Artificial Intelligence is challenging the idea that India's a good place to send work to save money.

Phil Fersht, CEO of HFS Research told TechCrunch that we should not just think about jobs moving from India to the US. The bigger change is that Artificial Intelligence is reducing the amount of work companies need to do.

"This is not one company making a change " Fersht said. "It is part of a pattern we are seeing as companies change the way they work because of Artificial Intelligence and automation."

What comes next

Varun Rekhi, a venture capitalist at Speedinvest said that if Artificial Intelligence reduces the need for labor- services it could put pressure on one of Indias biggest industries. Supplying talent and expertise to global companies.

For now Opendoor is an example. The company has been cutting jobs for years. Their decision to leave India may say much about their own struggles as it does about the future of Artificial Intelligence and work, with other countries.

As Fersht said: Opendoor may be one of the first big examples but it will not be the last.