Why is AI being trained in rural India?

The city of Virudhunagar in southeastern India features temples dating back thousands of years.

But not far from those ancient sites, people are working on the latest technology – artificial intelligence.

One of them is Mohan Kumar.

“My role is AI annotation,” he says. “I collect data from different sources, label it, and train the AI ​​models so they can recognize and predict things. Over time, the models become semi-supervised and can make decisions on their own.”

India has long been a hub for outsourced IT support, with cities like Bangalore or Chennai becoming traditional centers for such work.

But in recent years, companies have moved this work to much more remote areas, where staff and space costs are lower.

This trend is known as cloud farming, and AI has given it another boost with several cities, like Virudhunagar, hosting companies working in the field of AI.

Does Mr. Kumar think he is wasting an opportunity by not being in a big city?

“Professionally, there is no real difference,” says Kumar. “Whether in small towns or in metros, we work with the same global clients from the US and Europe, and the training and skills required are the same.”

Mr. Kumar works for Desicrew. Founded in 2005, it was a pioneer in cloud farming.

“We realized that instead of forcing people to migrate to cities in search of jobs, we could bring jobs to places where people already live,” says Manivannan JK, CEO of Decicro.

“For too long, opportunities have been concentrated in cities, leaving rural youth behind. Our mission has always been to create world-class jobs close to home, while proving that good work can be delivered from anywhere.”

Desicrew does all kinds of outsourced work, including software testing for startups, building datasets to train AI, and content moderation.

Currently, 30-40% of its business is related to AI, “but very soon, it will grow to 75-100%,” says Mr. J.K.

Much of this work is transcription – converting audio into text.

“Machines understand text much better,” he explains.

“For AI to function normally, machines must be trained to understand differences in the way people speak. That’s why transcription is a crucial step; it forms the basis for machines to understand and respond to languages, dialects and contexts.”

JK says there is no shame in doing such work in a smaller town.

“People often assume rural media is backwards, but our centers mirror urban IT centers in every way – secure access to data, reliable connectivity, and uninterrupted power. The only difference is geography.”

About 70% of his workforce are women: “For many, this is their first paid job, and the impact on their families is transformative – from financial security to their children’s education,” says Mr JK.

Founded in 2008, NextWealth was also an early adopter in cloud farming.

Headquartered in Bangalore, it has 5,000 employees across 11 offices in small towns across India.

“60% of India’s graduates come from small cities, but most IT companies hire only from metros. This leaves behind a huge untapped pool of bright first-generation graduates,” says Mythili Ramesh, co-founder and managing director, NextWealth.

“Many of these students are first-generation graduates. Their parents are farmers, weavers, tailors and policemen – families who take out loans to fund their education,” she says.

NextWealth started out outsourcing the back offices of major companies, but five years ago it moved into artificial intelligence.

“The world’s most advanced algorithms are trained and validated in small towns in India,” says Ms. Ramesh.

About 70% of its business comes from the United States.

“Every AI model, from a ChatGPT-like system to facial recognition, needs massive amounts of human-labeled data. This is the backbone of cloud farming functionality.”

She believes there is a lot of work ahead.

“In the next three to five years, AI and GenAI will create nearly 100 million jobs in real-time training, validation and processing. India’s small towns can be the backbone of this workforce.”

She hopes India will remain a hub for such work.

“Countries like the Philippines may catch up, but India’s size and early start in sourcing AI gives us a five- to seven-year advantage,” she says. “We must capitalize on it before the gap narrows.”

KS Viswanathan is a technology consultant and previously worked at the Indian National Association of Software and Services Companies, the trade association for outsourcing companies.

“Silicon Valley may be building AI engines, but the day-to-day work that keeps those engines reliable increasingly comes from India’s cloud farming industry,” he says.

“We are truly at a turning point. If cloud farming continues to expand, a small city in India could become the world’s largest center for AI operations, just as it became a center for IT services two decades ago.”

But success is not guaranteed.

While Next Wealth and Desicrew say they have access to reliable and secure internet connections, Viswanathan says that’s not always the case in small towns in India.

“Reliable high-speed Internet and secure data centers don’t always equal subway traffic, making data protection a constant concern.”

Even if there is good communication, efforts must be made to reassure customers.

“The biggest challenge is perception rather than technical. International customers often assume that small cities cannot meet data security standards, even when systems are robust. Trust must be earned through delivery.”

Back at NextWealth, Dhanalakshmi Vijay is ‘improving’ AI. For example, if you mix two similar pieces, such as a blue denim jacket and a navy blue shirt, you will correct the pattern.

“These corrections are then fed back into the system, adjusting the model so that it performs better the next time it sees a similar situation,” says Ms. Vijay. “Over time, the AI ​​model builds experience, just like software is updated with regular patches to make it more accurate and reliable.”

Such work has real-world impact.

“My team and I are the ones indirectly training the AI ​​models to make the online shopping experience easy and hassle-free,” she says.