To showcase the change afoot at Infosys Ltd., Vishal Sikka arrived at an earnings conference in a self-driving golf cart. That was in July last year. A month later, he quit as the chief executive officer, cutting short a tumultuous term marked by a spat with co-founders.
But the cart stays—with added features. And by year-end, India’s No.2 software services provider plans to build more of them for its campuses at home and the U.S. An app to book a ride will also go live then.
The Bengaluru-based firm isn’t competing with the likes of Wymo or Google Inc to build autonomous vehicles, according to Sudip Singh, senior vice-president, global business unit, and head, engineering services. It’s to show clients that Infosys is capable of helping them keep pace with disrupting technology, he said as we hitched a ride on the prototype, snaking past employees and lush-green lawns at the company’s Mysuru campus.
“We are a services provider, not a product company,” Singh said. The aim is to build use cases for clients and support makers of self-driving vehicles in the future, he said, not forgetting to point out: “This could be one of the cheapest self-driving golf carts.”
India’s ability to offer services at lower costs originally earned it the tag of back office to the world. Since the early 1980s, corporations in the U.S. and Europe saved costs by outsourcing back-end jobs to nations with lower labour costs. Companies like Infosys and its larger peer Tata Consultancy Services Ltd. lapped up the opportunity, creating an industry that’s now worth about $170-billion, and also the nation’s largest export.
What the back-offices did is being increasingly automated. Artificial intelligence and internet of things are the new bywords as businesses again plan to use technology to pare costs. According to IDC, the IoT market will be worth $1.7 trillion in 2020, with 27 percent of it going to information technology and installation services.
Infosys is relying on the self-driving cart to prepare it for that opportunity.
Built in a year, the cart uses laser- and camera-based navigation systems. Its controls were conceptualised and prototyped in Mysuru. The company will hawk the technology to its clients — everyone from a miner to a manufacturer.
“There are set of use cases across three primary industry segments such as mining, automotive and discrete manufacturing that are relevant for our clients,” Singh said. “We are proactively building proof of concepts for them, and that will get monetised.”
The outsourcing services provider expects to reap revenues from the technology in two years. “This year we are focusing on developing the deep competency, building the right pool of certified people, and won’t be tracking the revenue very closely,” Singh said.
The transition won’t be easy. Sikka, then the first CEO at the company who wasn’t one of its founders, set in motion the change towards automation. It came at the expense of growth which is now in single digits. While digital services now account for a quarter of its revenue, Infosys has lowered its operating margin forecast for the ongoing financial year to 22-24 percent. For the year ending March 2019, it expects revenue to grow in the range of 6-8 percent in constant currency terms and 7-9 percent in the US dollars.
Salil Parekh, who replaced Sikka, told Bloomberg that the company is willing to sacrifice margins in the short-term by investing in advanced technology and skills.
Infosys is not alone. Peers like Accenture, Cognizant, IBM, and Tata Consultancy Services are also aggressively pushing new services. Accenture’s digital, cloud and security-related offerings accounted for more than 55 percent of its revenue in the quarter ended November, while for Cognizant they contributed a little less than 30 percent.
Everyone is adopting cutting-edge technologies in some way or the other, Arup Roy, research director at Gartner, told BloombergQuint over the phone. The question, he said, is what unique solutions IT companies are offering. “What is the revenue model, and what kind of revenue growth companies like Infosys are looking at, and will it be sustainable? That’s the biggest challenge, and it’s not clear yet.”
India’s software services providers have been in news for laying off employees as new technology has rendered traditional roles redundant. And it’s difficult to find quality new coders.
Only one in 20 aspirants in India writes the correct logic for a programme, the minimum needed for any coding job, according to a study by employability assessment company Aspiring Minds. About 95 percent of engineers in the country, it said, are not fit to take up software development work.
In fact, Infosys started work on the self-driving golf cart to also reskill its engineers. The company tied up with Silicon Valley-based online learning company Udacity for a 20-week residential programme in Mysuru. It’s usually a nine-month course, David Silver, head of self-driving project at Udacity, said. For Infosys, it conducts an accelerated residential programme. Employees are selected through hackathons and it has also partnered with Indraprastha Institute of Information Technology (IIIT), Delhi and Stanford University. So far, Udacity has trained close to 100 Infoscions and plans to certify another 400 in autonomous technology.
The company, Singh said, is banking on early-mover advantage in autonomous technology, hoping that investments and a trained talent pool will help the company carve a niche. “We are already there, and this kind of investment is not done by any other service provider. We have invested ahead of the curve.”
Roy of Gartner expects it to take time. Out of 80 percent of the respondents saying they are experimenting in the area, real adoption of AI worldwide is just less than 4 percent. A reason why he calls it a “naive play”.