India’s information technology sector is facing disruption from cloud, automation and artificial intelligence, as “self-healing” codes ride over hand-written ones, bots replace humans and software engineers compete with behavioural analysts for jobs, Rostow Ravanan, CEO and managing director of Mindtree said.
“Today we are rolling out products to customers with self-healing code. Once you write the code and deliver it, you don’t need to maintain it, test it, as the code takes care of itself,” Mr. Ravanan said in an interview.
When the company makes software “I don’t need to provision a new environment. Software script itself has a code that spins up an environment, runs the programme, runs analytics and the moment it finishes, it shuts down the environment.”
Infrastructure as code
“Today for example [in the] physical environment servers are available on demand in places like Amazon Web Services. So you can write infrastructure as a code which therefore means if I look at infrastructure management, maintaining hardware etc., all of these services are no longer needed by the customer. A lot of effort that has gone into all these things have hollowed out significantly.
“The more we move into a cloud-based infrastructure, infrastructure as a service will become lesser and lesser….about 16-17% of my revenue right now, slightly larger for somebody else. But the whole thing will go away in a couple of years when cloud becomes a larger adaption. This is one dimension of the trend,” Mr. Ravanan said.
The global public cloud services market is projected to grow 21.4% in 2018 to $186.4 billion, up from $153.5 billion, according to Gartner Inc. Amazon Web Services, Google, and Microsoft will capture76% of all cloud platform revenue in 2018, expanding to 80% by 2020, accordion to Forrester.
“The second dimension is historically, technology was so complicated. To roll out a technology to a customer and get its business benefits took a lot of time,” Mr. Ravanan said.
“So what has happened is technology has become so mature and so advanced that you can do very large scale impact in a very short time. The Indian IT industry is in a primarily effort-based revenue model.
Revenue model
“My revenue to my customer is the number of people that I have multiplied by the utilisation rate multiplied by the billing rate I have. Now, if the effort is becoming lesser and lesser in terms of creating value for the customer, then the effort-based revenue model is getting severely disrupted,” Mr. Ravanan noted.
“I need to, therefore, go back to a customer then and say can I do risk reward? Can I do outcome-based? Can I do alternate commercial models, alternate legal models, contracting models? All these disruptions are impacting us from a talent point of view, go-to-market point of view, from a commercial point of view and disrupting us in multiple ways right now,” he said.
Severe disruptor
Another trend that is “severely” disrupting IT business is automation, he said. We are looking at projects where we start with say a 100 units of effort on January 1. By December 31, in the same year, I have automated 67 units of effort. I am running the project with 33% of the team or size or number of people or hours etc., compared to what I started the year. In April, Mindtree announced that its headcount was 17,723 people and 335 bots.
“So we are having a combined human and non-human workforce within the organisation. So, that is another form of disruption that is happening in our business. Again, these have multiple implications.
“I spent one-time effort in building the bot. How do I price it to the customer? How do I tell the customer that I have Rajiv and Suresh on the project, but Rajiv is a human being and Suresh is a bot. Then how do you explain this, how do you write contracts for this and how do you charge for this to the customer etc., is another form of disruption that is affecting us right now.”
Valuation estimate
Transparency Market Research estimates that the global industrial automation market will reach a valuation of $352.02 billion by the end of 2024 from its valuation of $182.64 in 2015.
Over the forecast period of 2016-2024, the global market is expected to expand with a compound annual growth rate (CAGR) of 6.6%.
“If I look into the future and what is likely to come, in our opinion a series of things are around artificial intelligence,” Mr. Ravanan said.
“As artificial intelligence even improves further where artificial intelligence learns, then I may not need software programming skills and I may need much more analytical skills much more value-added skills to be able to use that technology.
“Today, Google and Apple have digital assistants on their device. So many things are getting done by the device. So, technology tends to take over a load of some of these things. Again it will make a fundamental difference the way we look at our business in the future,” Mr. Ravanan said.
The skills required to be able to deliver business would become much wider, he said.
“For example, we have behavioural analysts in our organisation, user experience designers who are to some extent behavioural analysts than software engineers already. “So, from a future point of view, AI will be a big disruption that is going to affect our industry in a 3-5 year kind of time-frame.”
