Indian IT/ITeS sector: Shaken, not stirred

Sweet are the uses of adversity, goes the Shakespearean proverb. The Indian IT/ITES industry could do with learning a few lessons from adversity. To say that the USD 150 billion industry is at the cusp of uncertainty, is putting it mildly. 

17 years ago, the millennium bug gave birth to an industry that employs millions of people. Indian IT sold software services cheap, sold it in bulk, and grew massively. But smack-down in the middle of the golden hour, came in the form of SMAC – Social, mobility analytics and cloud. It’s not that the Indian IT-BPM industry has completely failed to innovate, the fault lies in the slow pace of innovation and adoption of new technologies. On top of it, the Trump and Brexit paranoia have also added to the uncertainty. 

According to Nasscom, the industry clocked USD 110 billion in annual export revenue in 2016. Towards the end of the year, the top guns of the IT-BPM industry announced a dip in revenue and the storm has been brewing since. But Nasscom predicts that despite this worrying scenario, the rate of growth will be consistent. The Indian IT-BPM sector will have an 8 to 10 percent growth in FY 2017, predicts Nasscom. 

But is the worst really behind us? Is it just a few bad quarters and nothing else? Will the Nasscom prediction of reaching USD 350 billion by 2025 become a reality? 

We spoke to top CIOs in the industry to figure out the road ahead for the IT/ITES sector. Devaraj PR, VP, Cognizant, Sunil Gujral, CIO, Quatrro, Darshan Appayanna, CIO, Happiest Minds and Subramanyam Putrevu, CIO, Mindtree spoke to us about the industry outlook for 2017. 

How would you sum up the digital transformation that took place last year?   

Devaraj PR:  Enterprises are increasingly looking to defend their businesses against digital disruptors, while innovating to create new areas of growth and differentiation. They have been making fundamental changes throughout their organizations from the front office, through the middle office and to the back offices systems. They have been driving new levels of efficiency and effectiveness in the core transaction processing operations, transforming their existing IT systems and infrastructure to next generation IT to harness the potential from digital technologies, and building new front-end capabilities enabled by digital technologies that create personalized experiences for their customers, employees, suppliers, and other stakeholders.  

Darshan Appayanna: Last year was a time of significant change for the Indian IT industry. There have been several changes, for instance, the industry looking at BOTs etc to automate. 

Sunil Gujral: There are two kinds of ITES companies. One which are driven by what their partner demands. Those companies are finally focusing on digital transformation – for their backend processes such as recruitment, HR, finance, leave approval, learning and development. The other type, that is, the platform oriented companies are also now using reasonable amount of cloud and mobility and business analytics. There has been a reasonable move to newer tech, but there’s a long way to go. 

Subramanyam Putrevu: The digital transformation in 2016 centered on analytics and predictive models in a much more comprehensive manner. This is going to aid the next transformation of automation and AI by using this data.  

Indian IT sector was the promised land when it came to employment once. Is automation becoming the necessary evil?   

Devaraj: Automation will increase substantially across all layers. However, it won’t supplant knowledge labor as much as work in tandem to make smart humans smarter and businesses more agile, thus increasing productivity.

Appayanna: Automation is just an augmentation of human efforts. So in the short term yes there will be a dip but employees have to up-skill themselves. If you stop up-skilling, you become redundant.

Gujral: There is definitely a temporary slowdown. After Y2K was over, people thought what next and how do we protect the jobs. But history has told us that new opportunities will emerge. IoT is coming in as a big technology. It’s no longer IoT now, it is shaping into IoE – internet of everything. But we can’t stay as we are with our current skill sets. We have to train and move ahead. Computerization is over, now it’s about understanding somebody’s needs and creating solutions accordingly. 

Putrevu:  Automation is going to improve efficiency. It is not an evil destroyer of jobs. It helps in improving efficiency and allows bandwidth creation for the workforce to focus on newer technologies. 

Your take on partnering with AI, cloud-based tech start-ups.   Devaraj: Startups are coming up with disruptive solutions in the digital technology space and we do partner with them to implement solutions internally and for our clients.

Appayanna:  Partnering with startups should be done. It will lead to finalization of some excellent ideas that are out there, so we will see innovation in products and solutions. 

Gujral: It is largely being done by larger companies that have the appetite to acquire. There are enough small companies which are being gobbled, the moment they come up with something that’s different from the standard way of doing things. The startup focus is on the AI side, largely based on using AI with analytics. 

Putrevu: Tech start-ups are building excellent platforms and different services. We are always open to explore partnering with them when we see a mutually beneficial roadmap.

What do you think should be the next tech bet for the IT/ITES sector?

Devaraj: With more technology in every product and behind every customer experience, and more data generated at every turn, businesses are, and will continue to become, increasingly technology-intensive. We see the continuance of digital transformation initiatives with analytics, automation and artificial intelligence gaining a lot more momentum.  

Appayanna: Augmented reality, virtual reality with analytics will be huge drivers along with intelligent automation solutions.

Gujral: It’s not necessarily the next bet, because it’s already set in. It’ll be partly AI and RPA. The new part of RPA is that it applies some level of intelligence and learning to be able to do things better. 2016 saw low impact automation and now the industry will go for something better. 

Putrevu: The next transformation bet for IT/ITES is AI and automation. The available tools and technologies in this space are at an inception point for rollout.

Where do you think the industry is headed this year?   

Devaraj: Businesses have realized that digital should be an enterprise. There will be wide endeavors cutting across every aspect of the organization that technology should enrich—business, operations and systems. Clients will continue to embrace digital technologies at an increased pace.

Appayanna:  This year will be about investments in automation and improving collaboration.

Gujral: Industry will embrace automation, RPA for sure. Digitization by itself comes with a set up problems about data and information. Digitization needs stronger security controls, so security remains a concern. Organizations will dabble with AI, and some of the leading companies are already tapping into AI. 

Putrevu: The key transformation is going to be around automation and AI. The regular and routine jobs will be automated to a great extent.