By Rakesh Agarwal and Melvyn Santarita
Long weekends often give us the time to slow down, catch up with old friends and relatives — often culminating in long brunches and deeper conversations. Our 79th Independence Day and Dahi Handi celebrations gave us that opportunity this time around.
Meeting old friends has its own charm: unfiltered conversations, inside jokes, and reminiscing about the good old days — not to be confused with our age! Our chat began with India’s scintillating win in the final Test in England, drifted to the soon-to-start English Premier League, and, after a few appetisers and drinks, took a more “profound” turn — politics, the Indian economy, and finally, AI; as one does, once the third glass of Long Island Ice-Tea hits the table.
All six of us come from different professional backgrounds, yet when the topic of AI came up, there was a shared undertone of uncertainty. The entrepreneurs among us were cautiously optimistic. The salaried folks? A bit more uneasy.
And not without reason. Earlier this month, we saw reports of job cuts across major tech companies — not just in India, but globally. Add to that the flood of headlines warning that “80% of jobs could soon be replaced by AI,” and the concern feels warranted.
The first-order reaction is obvious: Are we automating our way into mass unemployment? If machines do everything, what will people do? But here’s the thing — this fear isn’t new.
Every generation that has witnessed a major technological leap has also wrestled with the anxiety of what it might take away: jobs lost, skills made redundant, entire industries transformed or rendered obsolete. As someone who advises clients on their long-term goals, we see this anxiety up close — not just about markets, but about what the future of work looks like.
Yet history reminds us of that disruption often precedes reinvention. The problem is, in the moment, we tend to focus only on the immediate pain — the seen.
Historical Echoes of the Same Fear
To put today’s anxiety in perspective, let’s look at past disruptions:
Workers during the Industrial Revolution may never have imagined a world where automation would become part of daily life — but they absolutely feared its arrival. In trades like stocking and weaving, the introduction of mechanical knitting machines sparked fierce backlash. Machines were destroyed, inventors threatened, and in some places, even the military had to be called in to restore order. The resistance was real — and deeply human.
The fear we witness today — especially around AI — is simply a modern echo of an age-old anxiety. In fact, if social media existed during the Industrial Revolution, I imagine the Luddites would have been trending for weeks – especially with #BoycottLoom and #SayNoToMachines.
Economist Henry Hazlitt, in his book Economics in One Lesson, explained this anxiety as – “The Curse of the Machinery.” He built on the foundational work of Frédéric Bastiat, whose 1850 essay “Ce qu’on voit et ce qu’on ne voit pas” (“That Which is Seen, and That Which is Not Seen”) provides a timeless framework for understanding both the visible and invisible effects of economic change.
The Seen and the Unseen
- Seen effect: The immediate loss of employment in the disrupted industry.
- Unseen effect: The very machine that causes job loss needs people to design, build, install, and maintain it. More importantly, once the manufacturer gains from cost savings, their profits don’t vanish — they get recycled back into the economy in three major ways:
- Expanding operations — building more machines and hiring more people
- Investing in other industries — fuelling innovation and job creation elsewhere
- Increasing personal consumption — boosting demand across the economy
These ripple effects don’t always occur in the same place or at the same time, which is why the pain often feels immediate, while the gain feels distant — but it’s no less real.
Each of these outcomes leads to more employment and productivity, just not always in the same place or at the same time. It’s a reminder we often return to in our own practice: sectoral pain can co-exist with broad-based growth — if you’re looking in the right places.
This is where Joseph Schumpeter brings the argument full circle. In his 1942 book Capitalism, Socialism and Democracy, he famously described the cycle of disruption as: “The process of Creative Destruction is the essential fact about capitalism.”
Old models must be dismantled to make space for the new. In that sense, today’s AI-led job losses are not an anomaly — they are part of a process that has been playing out for centuries.
Sure, sitting here today, it’s hard to imagine where all the displaced employees will go — but that’s exactly where human adaptability comes in. Two decades ago, nobody could have predicted the rise of entirely new industries like social media, e-commerce, influencer marketing, or app development — each now employing lakhs. If society hadn’t evolved, we’d still have rooms full of typists clacking away on typewriters.
While we may have gone full economist there for a moment with a lot of academic gyaan baazi, we know what you’re really wondering: Ye sab toh theek hai, but bhai, tech stocks kya karenge?
The short answer — We don’t know. And that’s okay.
In fact, let us pause and say this — “I don’t know” is one of the most honest things an investor or advisor can admit. Unfortunately, it’s also one of the least said.
We live in a world where everyone seems to have strong opinions and confident predictions in their own echo chambers. But the truth is, no one really knows how a complex shift like AI will play out in the short term. Acknowledging uncertainty isn’t weakness — it’s wisdom.
What we can do is try to understand it better; think like Bastiat and look beyond just the headlines.
Core-satellite strategy– A core-satellite mix lets you ride the strength of the big boys while still having exposure to the up-and-comers.
In a globalised world, tech isn’t just an Indian growth story. Global firms — particularly those innovating at the frontier of AI — offer exposure to ideas and opportunities we may not always find domestically. Ignoring them may mean missing out on global diversification and cutting-edge innovation.
While this framework gives us a long-term lens, what about what’s happening right now? The latest earnings (Q1 FY26) offer a useful snapshot.
Large-cap IT companies saw flattish revenue growth (~+3%) but maintained stable margins (~20%). Mid/small-cap players grew faster (+8–10%) but felt the pinch of rising talent costs.
US Big Tech, meanwhile, continues to power ahead — driven by massive AI capex, strong cash flows, and margin strength despite elevated R&D spending.
But as always — these are just snapshots. The real story lies not just in what’s visible today, but in the potential, that’s unfolding beneath the surface.
History supports this too. Tech has faced its share of stumbles — from the dotcom bust (2000–01) to the GFC (2008) to the post-COVID tech correction in 2022. And yet, every single time, it has bounced back. The sector evolves — sometimes painfully, but always forward.
Technology has taken us further than anyone could’ve imagined a hundred years ago — and not just globally, but right here in India too. Closer home, while there are fair criticisms around whether our large IT firms have truly innovated in recent years, it’s also worth remembering what this sector has accomplished. Without any major government push, this sector pulled millions out of poverty since the ’90s. That’s no small feat. Still, when it comes to investing, it’s important to keep emotions in check — and not let nostalgia or past success cloud long-term decisions.
Closing brew
History shows us that every disruption feels unsettling in the moment, but over time, innovation has always rewarded those who stayed invested. For today’s investor, choice isn’t to fear change or blindly chase it, but to build a portfolio that can evolve with it. It’s about balancing the resilience of large-cap IT with the optionality of mid-caps and the innovation edge of US Big Tech. That mix can help navigate near-term uncertainty while capturing long-term opportunity.
The future may not be predictable — but with the right allocation, it remains investable
Of course, while I’ve spent the last few paragraphs giving a long-term perspective, I fully understand that for those who’ve recently lost jobs — or are anxious about it — this doesn’t feel like a macro trend. It feels personal. And it is personal. Behind every layoff is a household rethinking its future. No amount of optimism or historical context should downplay that. What we can offer, however, is a little clarity, empathy, and hopefully some direction amidst the uncertainty.
And with that, the evening ritual of brewing speciality coffee— measure, grind, brew, sip and enjoy is almost like therapy for many — and thankfully, still an experience that even the smartest AI can’t offer… yet.
