{"id":43668,"date":"2025-05-19T19:27:55","date_gmt":"2025-05-19T13:57:55","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=43668"},"modified":"2025-05-19T19:28:09","modified_gmt":"2025-05-19T13:58:09","slug":"ai-and-rise-of-hourglass-organisation","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/19-05-2025\/ai-and-rise-of-hourglass-organisation","title":{"rendered":"AI and the Rise of the Hourglass Organisation"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy, S&amp;T<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>In Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>According to <strong>McKinsey<\/strong>, AI could add trillions of dollars to the global economy, potentially enhancing productivity by up to 25% in firms that effectively adopt it.\n<ul class=\"wp-block-list\">\n<li>As global businesses shift towards AI-integrated models, a new organisational structure, the<strong> hourglass model is gaining prominence.<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>How is the Hourglass Model different from the Conventional Model?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Pyramid Model: <\/strong>Conventionally, organisations have a top-heavy leadership, a broad middle management, and a large operational base. It represents a structured hierarchy with a well-defined chain of command, multiple layers of supervision and control.<\/li>\n\n\n\n<li><strong>Hourglass Transformation<\/strong>: In this model, AI automates coordination, monitoring, and decision-making and thinning the middle layer while enhancing top-level strategy and base-level execution.\n<ul class=\"wp-block-list\">\n<li><strong>Gartner <\/strong>forecasts that by 2026, 20% of firms in the West will cut over half their middle managers using AI.<\/li>\n\n\n\n<li>Microsoft has recently announced the layoff of approximately 6,000 employees, constituting about 3% of its global workforce.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Collaborative Base:<\/strong> Frontline workers now work alongside AI systems \u2014 increasing speed, efficiency, and adaptability.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Case Studies and Sectoral Impacts<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>E-commerce &amp; Retail:<\/strong> Companies like Flipkart and Reliance Jio use AI for demand prediction, personalised shopping experience &amp; last-mile logistics.\n<ul class=\"wp-block-list\">\n<li>Yet, they retain human managers for language, diversity, and region-specific nuances.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>MSMEs:<\/strong> India\u2019s MSMEs\u00a0 the economic backbone can benefit from AI in inventory management, predictive maintenance &amp; sales forecasting.<\/li>\n\n\n\n<li>Yet affordability and awareness remain roadblocks.<\/li>\n\n\n\n<li><strong>Pharmaceuticals &amp; Healthcare: <\/strong>During COVID-19, AI helped firms navigate supply chain disruptions &amp; telemedicine operations.<\/li>\n\n\n\n<li><strong>IT &amp; Tech Services: <\/strong>Generative AI accelerates coding, boosting developer productivity by up to 66% (NNG study), allowing firms to shift focus to innovation.<\/li>\n\n\n\n<li><strong>India\u2019s rank in IMF\u2019s AI Preparedness Index: <\/strong>India houses vibrant AI innovation clusters in Bengaluru, Hyderabad, and Pune, yet it ranks 72nd on the IMF\u2019s AI Preparedness Index (score: 0.49). For comparison, the U.S. scores 0.77 and Singapore 0.80.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Challenges<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Job Displacement: <\/strong>Up to 800 million jobs globally could be affected by AI by 2030 (McKinsey).\n<ul class=\"wp-block-list\">\n<li>Middle managers and low-skilled workers face the highest risk. Large sections are non-graduates or older workers with low digital skills.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Skilling Deficit:<\/strong> While 94% of Indian firms plan to reskill employees (LinkedIn), execution is patchy. Government initiatives like Skill India need expansion and better alignment with AI-driven needs.<\/li>\n\n\n\n<li><strong>Ethical &amp; Data Risks:<\/strong> Bias in AI algorithms can lead to unfair outcomes in hiring, lending, or policing.\n<ul class=\"wp-block-list\">\n<li>The Digital Personal Data Protection Act, 2023 is a start but lacks robust enforcement and awareness.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Infrastructure Inequality<\/strong>: AI adoption is urban-centric; rural India remains under-equipped.\n<ul class=\"wp-block-list\">\n<li>Low-cost AI solutions for SMEs are scarce, and public-private partnerships are still evolving.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Way Forward<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Skilling &amp; Reskilling at Scale:<\/strong> Integrate AI modules in school and university curricula.\n<ul class=\"wp-block-list\">\n<li>Expand Skill India Digital to cover AI, data analysis, and prompt engineering.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Hybrid Organisational Models:<\/strong> Blend AI\u2019s precision with human judgment \u2014 keep humans in the loop for ethics, creativity, and leadership.\n<ul class=\"wp-block-list\">\n<li>Retain critical middle roles in culturally sensitive sectors (e.g., hospitality, education, public sector).<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Ethical AI Frameworks:<\/strong> Adopt global principles like OECD\u2019s AI Guidelines on transparency, accountability, fairness.\n<ul class=\"wp-block-list\">\n<li>Develop a national AI audit mechanism to ensure non-discriminatory outcomes.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Build India-Centric AI Infrastructure:<\/strong> Incentivise low-cost AI tools through PLI-like schemes for AI hardware\/software. Support Rural AI Labs under Digital India 2.0.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: TH<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<h3><strong>In Context<\/strong><\/h3>\n<li class=\"ms-5\">According to McKinsey, AI could add trillions of dollars to the global economy, potentially enhancing productivity by up to 25% in firms that effectively adopt it.<\/li>\n<p><\/p>\n<h3><strong>How is the Hourglass Model different from the Conventional Model?<\/strong><\/h3>\n<li class=\"ms-5\">Pyramid Model: Conventionally, organisations have a top-heavy leadership, a broad middle management, and a large operational base. It represents a structured hierarchy with a well-defined chain of command, multiple layers of supervision and control.<\/li>\n<li class=\"ms-5\">Hourglass Transformation: In this model, AI automates coordination, monitoring, and decision-making and thinning the middle layer while enhancing top-level strategy and base-level execution.<\/li>\n<li class=\"ms-5\">Gartner forecasts that by 2026, 20% of firms in the West will cut over half their middle managers using AI.<\/li>\n<li class=\"ms-5\">Microsoft has recently announced the layoff of approximately 6,000 employees, constituting about 3% of its global workforce.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/19-05-2025\/ai-and-rise-of-hourglass-organisation\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-43668","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/43668","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=43668"}],"version-history":[{"count":3,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/43668\/revisions"}],"predecessor-version":[{"id":43690,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/43668\/revisions\/43690"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=43668"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=43668"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=43668"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}