India's IT sector: From AI to cloud, evolving tech is pushing the sector forward

Home to some of the world’s major global IT powerhouses, including names such as TCS, Infosys, Wipro and Tech Mahindra, among many others, the Indian IT industry employs about 5 million people, and generates roughly 10 per cent of India’s GDP. Clearly, the sector is of critical importance to India’s growth story. But will the country be able to maintain its current leadership in IT services in the next two and a half decades? That remains unclear. Some of the questions that hang over the sector are: How will India’s IT landscape evolve by 2047? What would its structure and internal workings look like? What skills would be in demand in the next quarter century? The industry needs answers to these questions before it can be assured of sustainable and long-term growth.

Attempting to foretell the future 25 years from now is a daunting task, especially considering the rate at which technology is evolving these days. But even then, it is possible to explore the way we are headed based on the current overarching trends in the industry.

Tech of the Future

Leading Indian IT firms like TCS, HCL and Wipro, among others, are focussed on cutting edge technology such as artificial intelligence (AI) and machine learning (ML) while catering to their clients’ requirements. Further, it is a testament to their increased interest around these new tech avenues that Infosys—India’s second-largest IT services company—had invested in OpenAI, the start-up that designed conversational AI tool ChatGPT, over half a decade ago.

In step with the current emphasis and interest around AI among major IT players, Nitin Bhatt, EY India Technology Sector Leader, says that AI will be all-pervasive in the sector in the decades to come, but this would make the need for safeguards around individual and client data privacy all the more important. “IT companies will have to upgrade their tech stacks, leverage cloud and automate software delivery to really accelerate their development philosophy,” he explains.

IT firms, it would appear, have already started working towards this realisation. “We have established our strategic focus around hybrid cloud and artificial intelligence, underpinned by very strong enterprise-grade security,” says Sandip Patel, MD of IBM India/South Asia.

He adds that the ability to have applications and data work seamlessly across platforms is what the hybrid cloud is all about. “The ability to seamlessly have all that [applications and data] managed and do that with the right levels of efficiency so that you have faster speed-to-market is really what hybrid cloud is about. Next, doubling down on AI is equally important because the whole notion of being able to capture, curate and analyse the proliferation of data sets that are becoming real-time, and enabling them to help drive better decisions is vital for the growth of the sector,” he adds.

For instance, the acquisitions by IBM—of Red Hat that provides hybrid cloud infrastructure among other things, and Instana that provides AI and automation services—highlight the sector’s commitment towards these tech avenues.

Reinventing Businesses with Tech

Experts BT spoke to said IT firms would need to rethink their business models, keeping automation at the core of the operations for themselves as well as for their clients. “Business models will be re-architected by IT companies on a large scale; and business transformation programmes will be tech-led,” Bhatt says.

Automation and digitisation would make processes fast, efficient and reduce the cost for companies, which will in turn increase their revenues, says Srividya Kannan, Founder and Director of Bengaluru-headquartered Avaali Solutions, which provides digital solutions to enterprises. “By applying automation and digitisation solutions in certain cases, the process cycle time can be brought down by 35-50 per cent. Moreover, costs can be brought down by 10-15 per cent,” she adds.

Rekha M. Menon, Chairperson and Senior MD of Accenture in India, echoes these views and highlights that IT companies in the coming ‘Techade’ would need to go through a “total enterprise reinvention that includes systematically reinventing every part of every business using tech, data and AI”.

Industry watchers believe that IT companies would help move not just the digital transformation journey of their clients, but also India itself. They add that the government’s focus on developing digital infrastructure to power public services and provide last-mile access to healthcare, education, financial- and agri-services speaks of the massive opportunity for collaboration available in the IT sector. “The India Stack with Aadhaar, UPI, CoWin, and the national health stack, have set a high benchmark for using technology to drive impact at scale. To live up to its potential in the ‘Techade’, the Indian tech industry must double down on existing priorities and create new ones,” says Menon.

Bhatt adds that the IT sector will play a vital role in supporting critical infrastructure within the country. “Tech and IT firms will play a leading role in really enhancing public goods. It’s not just about technology helping corporations become better and make more profits, but playing a fundamental role in improving the human condition,” he says.

Jobs and Skills

But an overriding question on top of every stakeholder’s mind is this: Could the increased use of automation and digital tech lead to a decline in the IT workforce and the eventual replacement of humans by machines or algorithms?

The number of jobs in the tech industry might not reduce due to automation or the adoption of technology, says Akhilesh Tuteja, Partner, Global Cyber Security Leader, National Alliances and TMT Industry Leader at KPMG in India. “There is absolutely no doubt in my mind that the number of jobs in the technology industry, even after all of these advancements, will grow substantially.” He drives home the point with an example of how the advent of AI might lead to more jobs with the topical example of ChatGPT. “OpenAI has just had a big breakthrough—ChatGPT. It has been less than a few weeks and the number of platforms built on top of ChatGPT has already proliferated. There are more than 50 use cases being worked out—and this is just the tip of the iceberg,” he says. And with so many platforms, the number of people who are trying to build value via the AI is also significant.

Avaali’s Kannan breaks it down further by saying that rapid automation, digitisation and applications of AI would not make the current workforce redundant but simply “shift the skillset to more relevant skills”.

As we stand on the precipice of this technological transformation, businesses also have a responsibility to do their part in retraining their employees, stresses Menon. “Every business will need to evolve to become a creator and not just a consumer of talent, and unlock the potential of people by combining the power of technology and human abilities. This is especially true for India, considering our demographic dividend that is crucial for us to realise our aspirations,” she says.

Government & Policy

A vital aspect of India’s tech story is the policy framework and support that is required from the government’s end. When asked about the future of the sector during the Amrit Kaal and what policy changes the government is mulling to propel its growth in the years leading up to 2047, Ashwini Vaishnaw, Minister of Electronics and Information Technology, told BT on the sidelines of the Google for India event in December 2022 that there are a number of legislations—such as the data protection Bill, the telecom Bill and the digital India Bill—that will be tabled in the monsoon session of Parliament. “And in the G20 Summit [in September], we will be showcasing our technological capabilities to the world. Global players are very keen on our growth story,” he added.

Apart from the introduction of new legislations, industry insiders say that the government can help in a few more areas in the times to come. Tuteja of KPMG in India, lists four areas where the government’s contribution can help the IT sector in India. “The first one is a short-term measure, which will be to doubling down on skilling.

The government should make skilling for tech almost free of cost and mandatory in certain streams. The second one is to make the data available and ensure responsible usage. I believe India has a unique advantage of large population-scale data sets. So, having access to data in a responsible manner, not in an irresponsible manner, and making it usable for good research purposes should be the way. I believe the government is working on building policies and mechanisms for data governance, data management, data availability and data transparency,” he says.

Lastly, he stresses on research and innovation to drive the IT sector forward. Classifying innovation as the application of existing technology to new use cases, and R&D as the designing of new core technologies, he says that investments are needed for both of them. “Providing funds for innovation and developing an ecosystem of co-developing innovation through public-private partnerships and academic institutions will go a long way in building sustainable competitive advantage,” he says.

For the Indian IT industry, the next two and a half decades certainly look interesting.

@aakancvedi