India's topmost IT services firms are focusing on innovation to transform themselves, investing in radically non-linear growth to transition to an asset and IP and platform-led services delivery model.
Companies like India's second-largest IT services firm, Infosys, and its third-largest, Wipro, are working on developing innovative industry solutions that are standard at their core but hyper-specialized for specific customers.
To be sure, these firms still earn a chunk of their revenues from traditional businesses such as maintenance or infrastructure management even as their efficient, scalable processes are constantly driving down costs of delivering these services. But it is becoming increasingly obvious that the scope of further cost reductions in the traditional delivery model is limited. These processes have become standard.
India's IT industry is struggling to keep up with its former spectacular growth rates. While many firms are still growing at a much higher rate than their Western peers (13-15% rise in exports projected in 2015), revenues have slowed in the past years. As the historic model plays out, getting to the next level appears that much harder.
Meanwhile, the advent of digital technologies is having a profound impact, reshaping the $118-billion Indian IT industry and challenging conventional business models based on labor arbitrage. Disruptive technologies such as social, mobile, cloud, analytics and emerging technologies have presented the firms with an opportunity to invent and incubate new services that can help customers change their business drastically. There is an added urgency to innovate.
"Companies are making heavy investments in training the workforce. For instance, Infosys is training its engineers in design thinking, it is training sales teams to sell non-linear services. Companies are investing in building out infrastructure such as digital labs," said Sundararaman Viswanathan, associate director at consulting firm, Zinnov.
Infosys' rival Wipro, also Bangalore-based, has invested in a state-of-the-art Technovation Center, a hub of emerging technology solutions that leverages the intersection of technologies to deliver business innovation.
Wipro has also created a Global Process Transformation group to bring about innovation. The group develops cutting edge technologies and tools as well as alternative delivery models. A Business Outcome Services team then works on solutions based on emerging technologies and incubates such process innovations and scales them across the organization and to customers. It runs several initiatives to promote innovation such as its Ideathon, a program that crowd-sources employee ideas.
Wipro is focusing on six broad future technology themes to create innovations, said K R Sanjiv, Chief Technology Officer of Wipro. These include cognitive systems, man-machine interfaces, smart devices, robotics and drones, next generation architecture and software designed everything. The company believes these could start generating revenues within the next five years.
Among the innovative solutions that Wipro has deployed are a healthcare solution that addresses the growing need for affordable patient-centric healthcare by providing a technology platform that enables physicians, paramedical staff and healthcare providers to monitor and take timely action in cases involving high-risk patients both at home and in the hospital. Another solution mines information trapped inside images and videos to deliver automated and real-time intelligence leveraging machine vision technologies for domain such as surveillance, retail and gaming industries.
Meanwhile at Infosys, new chief executive Vishal Sikka has stressed on a "New+Renew" theme. In a recent chat with analysts, he talked of focusing afresh on product engineering and design thinking leading to innovation. Infosys is training employees in customer-centric design thinking, and over 8,000 employees have already gone through the training. It is launching an online employee training module on artificial intelligence. It is making significant investments in proprietary tools that push non-linear models.
"Our innovation agenda is built on a strong foundation of knowledge and skills in a host of powerful new technologies and concepts - from artificial intelligence to design thinking," said chief operating officer of Infosys, Pravin Rao.
Another significant boost to Indian IT firms' innovation agenda should come from harnessing the innovation power of startups, which offers niche services based on emerging technologies.
The industry is accelerating change at a pace not seen in the past couple of decades.
Saritha Rai is an India-based journalist and commentator who covers technology, business and society from her ringside seat in Bangalore.