San Francisco-based online home buying platform Opendoor is shutting down its India operations less than two years after expanding its presence there. The decision sparked a debate over whether AI is starting to change the economics of offshore work.
In announcing the decision Wednesday, CEO Kaz Nejatian cited a push to move operational operations back to the U.S., where Opendoor has customers, and a move to a smaller AI-native team. The company did not respond to requests for comment on how many employees were affected or how much of the decision was driven by AI efficiency. But the announcement quickly garnered attention across Silicon Valley, with founders, investors and outsourcing experts seeing it as an early example of how AI is reshaping the economic structure that has made India a global hub for back-office operations.
To understand why they care, it helps to know what is at stake for India. We have evolved far beyond our roots as an outsourcing destination for back-office operations. The country is now the world’s largest global capability center market (a term used to describe dedicated offshore units set up by multinational companies to handle everything from IT and finance to research and development), with more than 2,100 centers employing some 2.36 million people and generating nearly $100 billion in annual revenue.
Opendoor itself had built a large team in India to handle manual workflows across its fragmented systems, Nejatian said. The company had about 250 employees in India when it opened offices in Chennai and Bengaluru in 2024, but has downsized overall in recent years. Opendoor employed 1,042 people worldwide at the end of last year, compared with 1,470 in the same period a year earlier, according to a securities report. Similarly, the number of employees outside the United States decreased from 342 at the end of 2024 to 184 at the end of last year.
These widespread layoffs make it difficult to view India’s closures solely in terms of outsourcing. Opendoor has been cutting costs across its business after a difficult period in the U.S. housing market that hit online home buying companies particularly hard. Still, the words Nejatian used to describe the move resonated with investors and outsourcing analysts who see AI reshaping the way companies organize their work.
Some investors saw the decision as a sign of what AI could mean for India’s vast outsourced workforce. “Many jobs will be lost in India as manual labor is replaced by AI,” writes Sheel Mohnot, co-founder of Better Tomorrow Ventures.
Others saw Opendoor as evidence of a major shift in how companies are organized. Keshav Lohia, a venture capitalist at Emergent Ventures, described the decision as a “watershed moment” for AI-driven businesses, arguing that advances in AI are beginning to challenge the cost arbitrage model that has made India a popular offshoring destination.
Phil Fersht, CEO of HFS Research, an advisory firm that tracks the global outsourcing and business services industry, told TechCrunch that this development should not be viewed simply as jobs moving from India to the United States. The more important change, he said, is that AI reduces the amount of operational labor that companies require in the first place, allowing companies to run leaner organizations regardless of their location.
“This is not an isolated restructuring,” Fersht said. “This is part of a broader pattern we are starting to see as companies redesign their operations around AI, automation, and more efficient workflows.”
Ferscht argues that the winners will be those that combine AI, software, and human expertise to deliver results without continually increasing headcount, creating a model he describes as “Services-as-Software.” Opendoor may have been one of the first high-profile examples, but it’s unlikely to be the last, he said.
Some investors are already speculating beyond individual companies. Varun Rekhi, a venture capitalist at Speedinvest, argued that if AI reduces demand for labor-intensive services, it could ultimately squeeze one of India’s most important export industries, which is built around providing talent and expertise to global companies.
For now, Opendoor remains a complex case study. The company has been cutting its workforce extensively for years, and its exit from India could say as much about its own predicament as it does about the future of AI and offshore operations.
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