Opendoor’s exit from India sparks a larger conversation about AI and outsourcing

Opendoor, the San Francisco-based online home buying platform, has decided to shut down its operations in India less than two years after expanding its presence in the country. The decision has become a flashpoint in the debate over whether artificial intelligence has begun to change the economics of working abroad.

In announcing the decision on Wednesday, CEO Kaz Nejatian pointed to the push to bring operational work back to the United States, where Opendoor’s customers are based, and a shift toward smaller, AI-driven teams. The company did not respond to requests for comment on the number of employees affected or how much of the decision was driven by AI efficiency. But the announcement quickly gained traction across Silicon Valley, where founders, investors and outsourcing experts see it as an early example of how artificial intelligence is reshaping an economy that has made India a global hub for back-office operations.

To understand why they care, it is useful to know what is at stake for India. It has evolved far beyond its roots as a destination for outsourced back-office work. The country is now the world’s largest market for global capability centers — a term for multinational companies’ dedicated offshore units set up to handle everything from IT and finance to research and development — with more than 2,100 centers employing about 2.36 million people and generating nearly $100 billion in annual revenue.

Opendoor itself has built a large team in India to handle manual workflows across fragmented systems, Negatian said. The company had nearly 250 employees in India when it opened offices in Chennai and Bengaluru in 2024. But the entire company has begun downsizing in recent years. Opendoor employed 1,042 people globally at the end of last year, compared with 1,470 the year before, securities filings show. Likewise, its non-US workforce declined to 184 employees at the end of last year, compared to 342 employees at the end of 2024.

These broader workforce reductions make it difficult to view India’s shutdown through an outsourcing lens alone. Opendoor is cutting costs across the business after a difficult period for the US housing market that has hit online home buyers in particular hard. However, the language Negatian used to explain the move resonated with investors and outsourcing analysts who see AI as reshaping how companies organize operational work.

Some investors viewed the decision as a sign of what artificial intelligence could mean for India’s huge outsourcing workforce. “As manual labor is replaced by artificial intelligence, a lot of jobs will be lost in India,” wrote Shel Mohnot, co-founder of Better Tomorrow Ventures.

Others saw Opendoor as evidence of a larger shift in how companies are organized. Keshav Lohia, a venture capitalist at Emergent Ventures, described the decision as a “watershed moment” for AI-driven operations, claiming that advances in AI are beginning to challenge the cost-balancing model that has made India a popular offshoring destination.

The development should not be viewed simply as jobs moving from India to the US, Phil Fersht, CEO of HFS Research, a consulting firm that tracks the global outsourcing and business services industry, told TechCrunch. The most important shift, he said, is that AI reduces the amount of operational labor companies need in the first place, allowing companies to run smaller organizations regardless of location.

“This is not an isolated restructuring process,” Fersht said. “It’s part of a much broader pattern that we’re starting to see where companies are redesigning processes around AI, automation and leaner workflows.”

Fersht said the winners will be companies that combine artificial intelligence, software and human expertise to achieve results without constantly adding headcount, a model he described as “services as software.” While Opendoor may be one of the first notable examples, he said it is unlikely to be the last.

Some investors are already extrapolating beyond individual companies. If AI reduces demand for labour-intensive services, it could ultimately put pressure on one of India’s most important export industries, which is centered around providing talent and expertise to global companies, said Varun Rekhi, a venture capitalist at Speedinvest.

For now, Opendoor remains a complex case study — a company that has been massively cutting headcount for years, and whose exit from India may say as much about its own struggles as it does about the future of AI and working abroad.