The Impact of AI on the Global Job Market: Substitution vs Complementarity Effects and the Rise of Entrepreneurial Thinking

The global job market is undergoing a dramatic transformation, with artificial intelligence (AI) playing a central role in reshaping industries, employment patterns, and the way we approach our careers. This transformation is particularly evident in countries like India, where rapid technological advancements intersect with a highly skilled, yet large, labor force. Two primary effects of AI on the job market—substitution and complementarity—offer distinct perspectives on how this technology will influence employment opportunities. Along with these, the shift away from the traditional 9-to-5 salaryman model towards an entrepreneurial mindset is also playing a crucial role in this evolving landscape. To thrive in this new world, individuals must upskill themselves and embrace new ways of thinking about work, drawing inspiration from resources like Reid Hoffman and Ben Casnocha’s book, The Startup of You.

1. Substitution Effect: Replacing Routine Jobs with Automation

The substitution effect refers to the displacement of human workers by machines or AI systems that perform tasks more efficiently and cost-effectively. This effect is particularly prevalent in industries involving routine, repetitive tasks, such as manufacturing, customer service, and data entry.

In India, for instance, the massive outsourcing industry, particularly in sectors like customer support and data processing, is already feeling the impact of AI and automation. AI-driven chatbots and voice assistants can handle a significant portion of customer interactions, and machine learning algorithms can process data faster than humans. As a result, jobs that involve these repetitive tasks are increasingly at risk of automation.

For many workers, the substitution effect may initially seem like a threat. However, it's essential to view this shift as an opportunity for workers to transition into higher-value roles that AI cannot easily replicate. Jobs that involve creativity, emotional intelligence, and complex problem-solving are less likely to be automated. Fields like healthcare, education, and creative industries may see new opportunities emerge, requiring a more skilled workforce.

The Indian context: India’s large service sector, which employs millions in low-skill, repetitive jobs, will need to adapt quickly. This means that workers must seek opportunities to reskill, moving away from roles that can be automated toward jobs requiring critical thinking, creativity, and interpersonal skills.

2. Complementarity Effect: AI as a Tool to Augment Human Capabilities

While AI might replace certain jobs, the complementarity effect refers to the way in which AI and human workers can collaborate, leading to greater productivity and the creation of new roles. Rather than replacing workers entirely, AI can enhance human capabilities by automating mundane tasks, allowing employees to focus on higher-value, more strategic activities.

In industries like healthcare, AI is being used to assist doctors in diagnosing diseases, analyzing medical images, and even predicting patient outcomes. Instead of replacing doctors, AI augments their work, making them more efficient and accurate. Similarly, in fields like law, AI tools can assist lawyers in sifting through large volumes of legal documents, allowing them to focus on strategy and client interaction.

In India: The complementarity effect is particularly relevant in fields such as technology development and entrepreneurship. As India’s economy becomes increasingly digitized, the need for workers who can leverage AI to enhance their work—rather than fear being replaced by it—will grow. For example, an AI developer in India might collaborate with AI systems to create innovative products or services, combining their unique human creativity with the computational power of AI.

The Decline of the 9-5 Salaryman Model and the Rise of Entrepreneurial Thinking

One of the most significant changes in the global job market is the decline of the traditional 9-to-5 salaryman model. As AI reshapes industries, many workers are finding that long-term, stable employment with a single employer is no longer the only or most viable option. Instead, people are increasingly adopting entrepreneurial thinking—whether as entrepreneurs or as "intrapreneurs" within larger organizations.

The rise of the gig economy, freelancing, and remote work is reshaping what it means to have a career. People are no longer confined to a fixed schedule or a single employer. Instead, they are taking on multiple projects, running small businesses, or even working on their own startups. This shift is also driven by the desire for more flexibility and the opportunity to build one’s own career path.

In India, where the entrepreneurial spirit has been long embedded in the culture, the rise of the digital economy is opening new avenues for individuals to take on more entrepreneurial roles. With the increased availability of online platforms, anyone can start a business, even with minimal investment. Indian workers, particularly in the tech and digital sectors, are turning to freelancing and consulting as a way to build their personal brands and work on their own terms.

How to Upskill and Thrive in the AI-Driven Job Market

To succeed in the new job market, individuals must upskill themselves in ways that make them valuable in an increasingly AI-driven economy. One key resource for this is Reid Hoffman and Ben Casnocha’s The Startup of You. In the book, they emphasize the importance of adopting an entrepreneurial mindset, even if you’re working within an organization. He encourages individuals to think of their careers as startups and take proactive steps to invest in their own development. Hoffman highlights the need for continuous learning, building a strong professional network, and being adaptable to changing conditions—qualities that will be crucial for surviving and thriving in the AI era.

Here are some key insights from The Startup of You that can help individuals upskill and adapt to the changing job market:

1. Embrace Lifelong Learning: In a world where AI and technology are rapidly evolving, the ability to learn new skills quickly is crucial. Whether it's coding, data science, or developing emotional intelligence, workers should commit to continual self-improvement.

2. Develop a Growth Mindset: Hoffman advises individuals to see challenges as opportunities for growth. In the face of AI disruption, adopting a mindset of resilience and adaptability will be key to navigating uncertainty.

3. Build a Diverse Network: Networking isn’t just about finding a job—it’s about surrounding yourself with people who can help you think differently and offer new opportunities. As AI technology continues to evolve, connecting with professionals from various fields will offer new insights and possibilities.

4. Personal Branding: The gig economy and entrepreneurial opportunities make it essential for workers to differentiate themselves in the market. Cultivating a strong personal brand—whether as a freelancer, consultant, or employee—helps you stand out in a crowded job market.

5. Find Your Competitive Edge: AI will complement many human capabilities, but it can’t replace qualities like creativity, emotional intelligence, and entrepreneurial thinking. Workers should focus on developing these uniquely human skills, as they will continue to be in demand.

   
   

Conclusion

AI's impact on the global job market is undeniable. While the substitution effect may lead to the displacement of certain jobs, the complementarity effect offers a bright future for those who adapt and use AI to enhance their skills. The traditional 9-to-5 model is fading, and in its place, a more entrepreneurial mindset is emerging. Workers who embrace this shift, adopt the principles outlined in The Startup of You, and upskill themselves continuously will be better prepared for the rapidly changing future of work.

The job market of the future won’t just be about adapting to AI—it will be about working with AI, thinking like an entrepreneur, and finding ways to harness new technology to create meaningful, impactful careers.

p.s. Drafted with the help of OpenAI & the Book: The Start-up of You authored by Reid Hoffman and Ben Casnocha while the video is courtesy, DOAC (Diary of a CEO).