Non Linear revenues refer to growing revenues faster than growth in number of
employees which leads to increase in both revenue per employee and
profitability. Indian IT services companies such as TCS, Wipro Ltd and Infosys
Ltd with a target to increase nonlinear revenues had started building expertise
& skills in the areas of automation and artificial intelligence. With a target
of increasing 20% revenue per employee in its IT Infrastructure division Tata
Consultancy Services (TCS) has introduced artificial intelligence (AI)
platform, Ignio. Wipro was the first Indian IT services firm to launch an AI
platform HOLMES, or “heuristics and ontology-based learning machines and
experiential systems”. Along with
improving productivity and margins, this nonlinear strategy of Indian IT firms
is aimed at creating differentiated offerings that will help them to acquire
high margin outsourcing contracts that were previously dominated by global
players like IBM, Accenture.
TCS had launched
Ignio as “paid pilot” projects for 18 clients, whereas Wipro has about 70
projects running on HOLMES, and Wipro expects to offer it to up to one-third of
its 1,000+ clients in the next 24 months. Infosys has about 32 projects in this
category and its CEO is pushing for more. There has been a dramatic
fall in the hiring levels of the Indian IT companies in the past few years due
to the automation and artificial intelligent
platforms. Major Indian IT players are
investing heavily in automation tools, platforms, and intellectual property
(IP)-based growth as the market is expected to grow further in near future.
NASSCOM hiring data highlights Indian IT
Industry have hired 14,350 engineers for each billion dollars in revenues for
the year ended March 2015, up from 13,505 recruitments for every $1 billion in
the previous year ended March 2014, 21,185 engineers per billion dollars in the
year ended March 2013, and 18,893 engineers per billion dollars in the year
ended March 2012. There has been a constant fall in the overall net hiring of IT professionals by Indian IT Industry
as a percentage of the total talent supply that includes engineers and
postgraduates in computer science in the past five years. For example, while
the engineering graduate output of Indian universities stood at 1.5 million a
year in FY15, up from 0.3 million in FY05, net hiring in the sector remained
stagnant at around 0.25 million over the past five years. This has resulted in
a huge demand-supply mismatch.
Automation & AI strategy is also reshaping the pyramid-shaped
organisational structure in of Indian IT sector as the lower level is moving up
towards the mid-levels there by increasing pressure on the middle management to
re-skill themselves for the skills required lower down in the hierarchy or lose
the job. The organisational structure in the sector is expected to look like a
diamond than a pyramid over the next three to five years. Non-linear and automation will increase in near future but that
does not necessarily mean that there will be no more opportunities for people
as most of the Indian IT players rely on linear growth model where more employees
are needed for increasing the revenue growth. It’s a mixture of both linear and
nonlinear growth for the Indian IT industry for the next five years. With a slowdown
in the IT budgets of the clients, Indian IT players cannot ignore nonlinear
revenue models.
