The man in the Bengaluru street thinks Indian IT is the cat’s whiskers. Revenue per employee (RPE) offers a reality check. The traditional big three, TCS, Infosys and Wipro, have figures below $50,000. The new kid on the block, Cognizant, beats them with RPE in the mid-$50,000. The oldest, HCL, scores just above $60,000. Not bad, you would think. Till you look at Accenture.
Accenture’s RPE is more than double HCL’s. IBM and Oracle turn in $220,000 and $230,000. Microsoft’s $600,000 is half the RPE of Google and Apple. There is, perhaps, a little room for improvement at Indian IT, you might concede.
One can’t really blame Indian IT. They started off with the Y2K problem, righting lines of code that entered the year as YY, instead of with four proper digits, YYYY.
This called for a lot of brawn and not much brain. After the Y2K scare was over, companies around the world continued to employ Indian IT brawn and Indian IT companies were happy to chomp on the low-hanging fruit.
The trees have all been growing taller. Indian IT has been craning its neck hard, with some success. But evolution has its limit: the giraffe’s neck is much longer than that of any other eater of tree foliage but it can only reach that high. It is limited by the mammalian count of seven vertebrae in the neck, whether for the nearneckless pig or for the giraffe. To reach higher, you need human ingenuity.
Human ingenuity has been going places in information technology, to Big Data, to the Internet of Things, to robotics and to that North Face-climb equivalent in IT, artificial intelligence or AI.
Big Indian IT companies have dipped a toe in data analytics (TCS analyses, real-time, the data generated by the assorted sensors placed by GE within its jet engines, to figure out when the engine or a specific part needs maintenance) or even acquired a toehold in the Internet of Things (HCL has a presence), but figure nowhere when it comes to the difficult climb in the rarefied heights of AI.
IBM offers AI as a cloud-based service. You can tap Watson’s cognitive prowess for as long as you want and as much as your budget can sustain.
Google’s 2014 acquisition, DeepMind, last year beat the world’s finest player of Go, a complicated board game that elderly Chinese play, to fill the void left by missing grandchildren and to ward off dementia.
On the last day of this January, Libratus, an AI program developed by Carnegie Mellon University, beat the pants off a bunch of human poker players, winning $1.5 million worth of chips off them.
Combined with the steady advance across the industrial world in robotics, AI might well make real, and not all that far ahead in the future, that cyborg who turns around and throws out a promise, over the smouldering remains of his mayhem, “I’ll be back.” And buried under the rubble and in no position to hear its undertone of menace would be Indian IT.
Unless they get their act together.
Degrees of separation
India today has the largest population of young engineers and engineering students. But few of them go on to complete a PhD in a branch of computing or of anything at all. They simply chew dutifully on the low-hanging fruit. This has to change, if Indian IT has to have a place for itself in the fast changing landscape of technology-driven business.
But why would a young engineer continue to study, when he can start earning with a bachelor’s degree, and a master’s or a doctoral degree fetches no premium? So, Indian IT must start using the talents of engineering PhDs at high salaries.
To justify it, without founding fathers raising prickly objections to a departure from traditional values, IT companies will need to develop business models that utilise PhDs to develop new tools and new technologies. This is the real challenge they face.
A bevy of Indian analysts keep calling on Indian IT to use its cash hoards to buy companies. HCL has been the most proactive in this game and has raised its productivity, as a consequence