A
new trend is gathering force in the Indian IT services industry, even as some of
the biggest firms — Infosys, Cognizant, and Wipro — recently signed
collaborations with IPsoft, a New York-based firm with development in
Bangalore, which provides autonomic solutions that can shave off a third or
more on the cost of engineers.

Take the case of
Infosys. Some months ago, the top-tier outsourcing firm struck a
revenue-sharing partnership with IPsoft “to help reduce costs of IT
operations and generate greater value for clients,” it said. The two are
setting up a center at Infosys’ Mysore campus, a three-hour drive from its
Bangalore headquarters, to focus on developing autonomic technologies and to
train 5,000 Infosys employees.

For the IT industry,
an autonomics-driven service delivery could ultimately equal a white collar
workforce disruption of the kind that robotics brought to the manufacturing
industry’s blue collar labor force.

 Companies like IPsoft
are using software robots to automate recurring manual IT tasks and to manage
applications and deliver back office services. By substantially reducing
and replacing humans in managing routine tasks, they maximize the efficiency of
IT operations. “A mix of virtual and real engineers could bring
cost saving upwards of 30% for enterprises,” said Uday Chinta, the India-based
managing director of IPsoft.

Autonomics could further shift the ground beneath the IT services industry which, after a three
decade-long boom, has been struggling. Indian firms have been recently grappling with decreasing profitability and
talent challenges as they try to transition from the traditional model of
billing for the number of engineers deployed on a customer’s project.

Some view automation
as the new threat to India’s $108-billion-in-revenues IT sector as tasks can be
executed at a fraction of what top-tier Indian IT services companies bill their
customers for their engineers’ services. That certainly calls for an
overhaul of the industry’s current business model.

“Automation
is a massive, massive threat that lessens manual intervention and could
disintermediate the need for offshoring,” said Siddharth Pai, partner and
president, Asia Pacific, of technology advisory firm ISG. “In infrastructure
management, for instance, what is a 15-engineer job could be accomplished by
automated software that then sends an alert to two engineers,” said Pai.

 Technology research firm
Gartner Inc. had predicted that a fourth of labour hours could get eliminated
by tools and automation by 2015. However, many IT companies are still in the early-adopter phase, automating
10-15% of the tasks for clients in the past year to 18 months, said Milind
Govekar, a managing vice president with Gartner Research. “It will get bigger,”
Govekar predicted. “The islands of automation will have to slowly come
together as managing complex interdependencies becomes difficult manually.”

   Top-tier outsourcing
firm Wipro is investing significantly to drive automation across applications,
infrastructure, security, and cloud computing. In the last 12 to 18
months, Wipro is seeing a substantial increase in adoption of automation, and it
is fast becoming a fairly standard part of clients’ requirements, said G.K
Prasanna, global head, global infrastructure services and product engineering
services. 

As customers demand
efficiency gains, both adoption and automation technology improvement will
accelerate in the medium term. “Differentiation based on labor
arbitrage will become less and less important. Intellectual property,
integrated operations, and scale will become crucial,” Prasanna
said. 

Indian IT companies
could stand to benefit from automation, which frees up valuable resources from
routine tasks and deploy them to innovate. Assigning engineers to do
boring monotonous tasks is such as waste of intellectual capital, said Chinta
of IPsoft.  But companies will have to plan the transition, and it may not
be such as an easy evolution.