How Automation is driving the next wave of growth for India's leading IT services companies

Automation is becoming the change enabler for Indian IT services biggies as they seek alternative business models to get their growth back on track. In this scenario, automation is becoming the change enabler. Software and process automation stands to change the way routine functions were ever thought of being performed. Automated technologies are eradicating the need for human intervention in different areas, especially high-volume, repetitive tasks including IT support, remote infrastructure, and business processes.

“As the offshore arbitrage has been used to the hilt by most service providers, the table stakes have changed and the next level of arbitrage is through automation of labor intensive functions,” says, Anupam Govil, Partner, Avasant.

There are many factors driving the push for automation. IT companies are moving towards non- linearity as they need to scale up without the burden of additional hiring. There is also the need to control labor costs as margins are shrinking. And to safeguard their businesses against growing attrition, new sourcing models backed by innovative technologies like automation are the best bet. It promises of a scenario where they no longer need to rely on the services of huge army of software professionals to get routine things done.

Industry experts sound confident that the benefits of automation would extend far beyond cost savings.

“Automation is not only about costs, it is also about providing more reliable quality, and providing faster turnaround to clients. Traditionally, clients have complained about lower productivity on offshore delivery. Automation provides a way to address these issues,” says, Chirajeet Sengupta, Vice President, Everest Group.

As new technologies continue to redefine the rules of IT services industry, automation is seen by service companies as the way to differentiate their offerings and gain competitive advantage. IT companies that have sound automation capabilities will be better positioned to re-price and realign their service offerings in line with changing expectations, while the ones sticking to traditional FTE models will tend to lose out in the increasing price wars.

“Service providers who rely exclusively on labor arbitrage, will find their competitive value proposition greatly diminished in the absence of a meaningful automation strategy. And those who are facing growth challenges due to other issues like sub-scale, poor sales force etc, will face even stronger pressures due to automation,” opines Sengupta.

There is no tiptoeing around the fact that Automation has the potential to bring revolutionary changes in the IT industry. According to the Institute for Robotic Process automation, “Any company that uses labor on a large scale for general knowledge process work, where people are performing high-volume, highly transactional process functions, will boost their capabilities and save money and time with robotic process automation software.”

Indian IT majors are increasingly looking at margin improvements and expanding their market share through innovative platforms either by way of partnering or through building capabilities inhouse. Govil, reveals, “Indian IT companies are investing on developing automation tools and platforms offering cost benefits to demanding customers. Providers like Infosys and Cognizant have entered into a revenue sharing agreement with IPSoft while HCL Technologies and Tata Consultancy Services (TCS) have developed their automation tools in-house.” While some players are providing it as an addition to their core offerings others have embedded it within their core services.

Infosys has been betting big in this space and has also taken the acquisition route to plug in the holes in its capabilities. Its Panaya acquisition signals the company’s growing interest around automated technologies. “We see automation as an opportunity to drive costs down and provide higher value for customers. More and more repeatable tasks will be automated. We have deployed our automation platform and initial results are very promising. We see between 30% to 50% productivity improvement,” says, Abdul Razack, SVP - Global Head - Infosys Platforms, Big Data and Analytics.

Close rival Wipro too has developed its Artificial Intelligence (AI) platform, Wipro HOLMES. “In 2015, we launched - Wipro HOLMES and brought together existing automation platforms, niche partner solutions to bring cognitive robotic interventions in infrastructure, applications, testing and BPS services,” reveals, Anurag Srivastava, Senior Vice President and Business Head, Business Outcome Services, Wipro.

Other leading players like Cognizant also have their strategies laid out. “Automation allows us the opportunity to structure, price and measure our offerings as outcome, transactional or gain-share agreements. We have a number of examples of clients on fixed fee and per transaction pricing, where we have taken the benefits of automation and shared the benefits of the new model, a win-win for both of us.” Robert H. Brown, Assistant Vice President, Business Process Services, Cognizant.

Mindtree, another key player in the space is confident that the technology will spur new dimensions of growth. “Our strategy is based on the extensive use of our proprietary monitoring and management platform, mWatch, which enables the company to monitor and automate a variety of tasks that typically involves significant manual monitoring and management, as well as leveraging our proprietary Atlas RAPID automation model along with a leading automation and autonomics solutions provider,” says, Ramesh Gopalakrishnan, Global Head - Delivery & Operations, Mindtree.