by Ed Nair

Tax and vaccine portals highlight scaling challenge for Indian CIOs

News Analysis
Jul 01, 2021
Big DataGovernment IT

Recent problems with two government websites show that a different approach is needed to deliver online services to 1.38 billion people.

indian income tax return
Credit: IDG

Scaling up any IT project can be a challenge, but for the government of India, delivering online services to the entire nation is a challenge of an entirely different magnitude. Little wonder, then, that two portals serving the country’s population recently suffered initial glitches and became fodder for social media uproar.

CIOs and business technology leaders working on nation-scale, technology-intensive initiatives could also glean some insights from these episodes.

In late April, minutes after opening up vaccination bookings to people aged over 18, India’s Covid vaccination portal Co-Win crashed due to the high traffic volume.

Then on June 7, India’s finance ministry opened its next-generation income tax filing system, intended to reduce processing time for returns from 63 days to one and to expedite refunds. However, many glitches were reported in the following days, and efforts are still on to stabilize the system’s performance, even as nearly 100,000 filings were made during the initial days.

Technologically, Co-Win is a simpler project than the income-tax portal. Its problems were fixed relatively quickly. and it accepted nearly 8 million registrations in three hours. The CEO of National Health Mission, R.S. Sharma, told media that the Co-Win platform has built up the capacity to handle 20 million users in a day. The platform is being benchmarked using the concept of load testing and is designed to take around 45000 API calls per second concurrently. The platform has published a privacy policy on its website, and stringent security measures have been put in to ensure that data is safe from hackers.

Transforming India’s tax processing system

The transformation project of India’s income-tax system has been a much-publicized initiative and is far more complex.

As part of the transformation roadmap, the department embarked on data management and analytics project in 2016. The project is called Project Insight; it was announced as the flagship project of India’s finance ministry done at the cost of nearly ₹1000 crore (about $150 million) and was aimed at widening India’s tax base using technology. The project was awarded to L&T Infotech. The project entailed creating an integrated data warehousing and business intelligence platform, which would help detect patterns and plug leakages to improve policy and operational effectiveness.

The platform was intended to collect data from traditional sources such as banks and financial institutions and social media sites to match spending patterns with income declarations. The data warehouse and business intelligence platform would power the central processing system, it was said.

The next leg in the transformation was to integrate the e-filing portal with the central processing system.

According to published sources, the current project valued at nearly ₹4200 crore ($567 million) was awarded to Infosys in January 2019. In the earlier system, e-filing and tax processing were done in separate systems. In the new system, the e-filing front end and central processing were to be merged to reduce the turnaround time.

The project was conceived in three phases, according to data from the government. In the first phase, the central processing system undertakes end-to-end processing of the statements through a rule-based tech system for a seamless flow of tax credit data.

In the second phase, technologies such as AI, analytics, and blockchain would drive improved services.

In the third phase, pre-filling of returns by the tax department would be enabled, and taxpayers could check the accuracy.

The overall outcome was to speed up processing and issuance of refunds, widen the tax base, and improve tax compliance.

No information is publicly available on the status of Project Insight and the phase-wise progress of the current project. The new income tax portal seems to be an important milestone in the progress of both projects. 

CIOs draw out learnings from project glitches

Due to the sensitive nature of the new income tax portal and Co-Win, and the enormous media interest in their difficulties, no technologist or CIO was willing to offer public comment on what could have gone wrong with these two sites. However, a few CIOs and tax practitioners (the most significant end-user constituency of the tax portal) offered their views under the condition of anonymity; the views provide learnings for other IT leaders in delivering large-scale projects.

Environmental disruptions should be factored in. CIOs surmised that Covid could have played a role in disrupting the pace of the project. All organizations had to readjust to new working conditions during the stringent lockdown in India from March to September 2020. One industry observer gave a fascinating insight that the IT industry had a stable or low attrition rate for much of the year in 2020, but in the last quarter, attrition levels started rising. In fact, in the first quarter of 2021, it was the highest. A startling statistic: between January and March this year, 5-8% of full-time employees onboarded left within the first 90 days. The data from across 100 companies between January and March, prepared by HAN Digital, indicates that one million employees would potentially resign this year.

Aggressive deadlines force trade-offs, most often in testing. It seemed that the vendor was working against aggressive deadlines. CIOs said that while deadlines are always bold, there are inevitable trade-offs to be made. The larger the scale of the project, the more magnified is the impact in areas where the trade-offs are made. Most often, testing cycles get short shrift, and they show up as deficient functionality. The problem is more severe when an entirely new platform is opened at once, rather than its parts.

A phased transition is always better than a total changeover. A phased transition from the old to the new would have avoided many of the issues faced initially. Many CIOs suggested that the old and the new platform should co-exist during the initial phase. It seems that in the case of the new income tax portal, the old system for e-filing was retired, and the changeover into the new one was total.

Customer experience should not be disrupted. As end-users, tax practitioners pointed out the need to maintain some level of continuity in customer experience. One of them said that any new system would be approached with a higher level of expectation than the old one, but if the customer experience falls far below, then the confidence in the new one won’t be sustained. 

Transitions should be carefully timed. It is always better to do the transition to the new system when the load is low: It helps to separate the issues that are capacity-related from the ones that are logic-related. Introducing such a large system less than two months before the usage peak was always going to be challenging.

The bottom line remains that a constant focus on scale, and the readiness to iterate till the goal is reached, are the overarching success factors for nation-scale projects such as Co-Win and India’s new income-tax portal. For CIOs, the experience of these projects only reiterate the importance of factoring in environmental disruptions, planning a phased transition, ensuring that customer experience is maintained, and adopting an uncompromising attitude towards testing even in the face of bold deadlines.