Agile delivery models to accelerated digitisation, automation is redefining the IT industry
Illustration by Raj Verma
Print Edition: Jul 26, 2020
In the middle of the pandemic in April, Tata Consultancy Services (TCS), India's largest IT services company, announced a deal with US-based Amway to transform the latter's information technology infrastructure and operations and its global service desk. Just a few weeks ago, Wipro had bagged a strategic, multi-year deal from European firm E.ON for infrastructure modernisation and digital transformation services.
The Indian IT industry passed the stress test when the world was grappling with the pandemic. For companies, this meant not only equipping the huge workforce to continue servicing clients from home, but also realigning businesses. As cost takes centrestage both on the demand as well as on the supply side, organisations are embracing changes like never before. From agile, flexible operating and delivery models to reimagining the workforce mix and accelerated digitisation, automation is redefining ways of doing business in the medium-to-long term.
Two years ago, TCS had started the experiment, 'Open Agile Workspaces', where clients on specific innovation projects could collaborate with location-agnostic teams. As lockdown intensified across the country, the company quickly scaled up learning from 'Open Agile' to implement the 'Secure Borderless Workspaces' (SBWS) model - work done without the confines of geographical locations. In a recent letter to shareholders, CEO Rajesh Gopinathan said the outcomes of the new ways of learning have been impressive, and the company aims to continue SBWS as an integral part of its functioning going ahead. "There are even pockets where we have witnessed improved velocity, throughput and productivity," Gopinathan had said. TCS is looking to have only 25 per cent of its staff in office by 2025.
Apart from normalising remote working, companies are also looking at tweaking the onshore-offsite model to optimise costs and improve profitability. For Indian IT firms, onsite, or employees working overseas, is normally 22-29 per cent of their workforce. However, in the past two-three years, Tier-1 companies have increased localisation efforts, especially in the US, the biggest market of IT firms, as a goodwill gesture, though the cost of hiring locally is higher. But with added concerns over immigration issues in America and visa restrictions in other geographies, most companies are now stressing on offshore resources due to the cost advantage.
The signs of this changing composition of workforce are visible in the adoption rate of cloud computing in the form of how service concepts such as As-a, are evolving, says Feroz Khan, Partner and Leader, Digital and Emerging Technologies, KPMG India. "On a medium-to-long-term range, we can expect onshore to offshore ratio moving towards a 20:80 figure, which means that going forward, most of the resourcing in IT will happen offshore," he adds.
As part of the new cycle, companies are also looking at increasing the digital workforce (use of bots, automation of repetitive task). This could free-up nearly 10-15 per cent of the human workforce when deployed at scale (handling large volumes), and the resources can then be used for other projects, resulting in an increase in the overall revenue-per-employee metric.
Then there is the increase in gig or temporary staff. "Our research shows that what used to be anywhere between a 2 to 10 per cent mix, could now increase to 20 to 25 per cent" says Nitin Bhatt, EY Global Advisory Risk Transformation Leader, and India Technology Sector Leader.
Changing Deal Structures
The distributed workforce has also paved the way for IT companies to explore innovative ways of offering products and services. With a fundamental shift towards reducing delivery costs, companies are not just integrating analytics, artificial intelligence (AI) and deep automation, but also crowdsourcing solutions for superior and faster outcomes. For instance, TCS's Machine First Delivery Model (MFDM) uses intelligent automation and AI to solve complex business problems and also enables cognitive decision-making, which enables systems to self-manage themselves and defend against risks. NG Subramaniam, Chief Operating Officer, TCS, said in several large deals signed in FY20, the company had undertaken core transformation work by using this method of delivery to bring changes to customers' IT operations.