TCS to invest more in developing more software platforms

The IT firm’s BPO business is looking to step up automation by up to 40-50%

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With increased automation, TCS aims to improve revenue earned per employee in its BPO business. Photo: Hindustan Times

Bangalore: T ata Consultancy Services Ltd (TCS) may increase investments in developing more software platforms that help in automating increasingly routine and commoditized tasks in its business process outsourcing (BPO) business, as it looks to improve revenue earned per employee.

India’s largest software services firm’s back-office business is looking to step up automation by up to 40-50% and eliminate increasingly redundant business tasks by making use of robotic automation, the company’s global BPO head said in an interview.

“Even before automation, there is a process called elimination. So if I have a business process that was relevant 20-30 years ago but is no longer relevant, it still exists and people are still doing it because nobody takes the risk of removing the redundant process and eliminating it completely,” said Abid Ali Neemuchwala, global head of BPO services at TCS. “Firstly, I think there is an opportunity of eliminating processes altogether, then from whatever remains, there is an additional opportunity of 40-50% of automating it, compared to current levels.”

Neemuchwala said some of these automated services were already being delivered to existing customers and had resulted in the company taking out 20-30% of increasingly routine, manual tasks.

“We are investing and creating intellectual property and making significant investments across the board in robotics automation,” he said.

Robotics automation is considered to be the single biggest disruptive threat to India’s $118 billion information technology (IT) industry.

For years, India’s top software firms have hired thousands of engineering graduates and housed them in large campuses. The pyramid model that sees the entry of hundreds of engineering graduates every year brings down the cost of software development and maintenance projects.

But with the advent of software robots developed by new-age firms such as US-based IPsoft Inc. and Britain’s Blue Prism Ltd, the traditional pyramid model is increasingly under threat, as these software robots can perform tasks at one-fourth the billing rates and a fraction of the time it would take a human engineer to do.

“Service providers appear to be sitting on the fence as to how companies such as IPsoft and Blue Prism can accelerate automation and thus drive down costs. The caution of service providers is, in all likelihood, caused by the desire to avoid the socioeconomic implications of robotics and the potential elimination of labor,” Thomas Reuner, principal analyst at Ovum Research, wrote in a recent note.

With commoditization of low-end back-office services happening at an increasingly rapid pace, pure-play, stand-alone BPO firms are facing an ever-growing threat from robotics automation.

“When we had people on time and materials doing support for our systems, they didn’t have an incentive to automate support because it was based on people. When we changed this, the first thing our partners did was starting automate in-support. So I think that’s the phase we’re in now and we’re getting to a stage of maturity, so we can delegate more and more to our partners,” Jeroen Tas, chief executive of healthcare informatics, solutions and services at Royal Philips NV, said in a recent interview. Philips is one of the top customers of Indian IT.

Most top Indian IT firms have already taken the plunge towards increasing automation, as top customers such as Johnson and Johnson and Citigroup Inc. are opting for billing models that are not linked to the number of people per project.

Most top firms such as Infosys Ltd, Cognizant Technology Solutions Corp. and Wipro Ltd have signed revenue-sharing agreements with IPsoft to avoid losing business from existing top customers to the US-based firm.

In the 2014-15 financial year, industry lobby Nasscom expects software export revenues to grow 13-15%. Annually, TCS’s BPO business generates $1.5-2 billion in revenues currently.

nagesh dubey