For the last few month, a single day has not gone
past, where we didn’t see a news, blog or a story on the crisis and future of
Indian IT industry in the face of new transformative and disruptive technologies
of Automation, Artificial Intelligence (AI) and Robotics. To add to the woes,
President Trump has come down hard on the H1B visas (the backbone of
Onshore-Offshore service model of Indian IT industry) and Brexit has added to
the uncertainty in the UK market.
The common theme around these news stories is job
loss, local hiring, salary cuts and restructuring especially around middle
management / managerial positions.
Let's look at each factor and see the impact:
Job Loss: I don’t believe there will be a
net job loss in the industry; but yes job shift, skill realignment and
retraining may be required for the current lot.
Even with the emergence of new technologies,
products and platforms around AI, Automation and Robotics, the IT industry will
still need engineers for development and support of the new solutions. IT teams
will still be required for Project Management, Application Development, Testing
and Support. A lot of new jobs are going to be created in areas like AI,
Internet of Things (IoT), cyber security, cloud, Big Data, machine learning,
etc. In fact, I see a lot of work coming around the way of IT sector when the organisation
world over start to incorporate the new technologies and start migrating from
old platforms to new ones.
The current hyperbole I see today is akin to what
was observed when the computers were introduced in India. There was a similar
sound about people getting jobless, and a single computer doing the work of multiple
persons. Although computers can do much more work than humans but instead of a
net job loss, on the contrary, it led to the creation of global scale IT
industry in India.
Local Hiring: If we historically look at any global
industry, we will notice that eventually the localisation of the products,
services and workforce do happen over time. Look at any global company in India
right now, it would have probably started with its global product line in India
but would have eventually started a local production and servicing, thus having
a local workforce. This is something similar happening to Indian IT industry.
As it grows and have more revenues in local markets, it will have to hire more
local resources. Its just that this natural process is hyped and stressed upon
due to recent voices of protectionism and nationalism. “Buy American, Hire
American”, “Make in India” - does these slogans ring a bell?
Salary Cuts and Restructuring: Also,
some of the news stories have focused on salary cuts being offered to mid
management executives in order to keep their jobs. Well this shouldn’t come as
a surprise to anyone from the IT industry. The managerial positions, over the
time, has become less productive, with low or no value addition and
increasingly redundant.
The reason is two folds. Firstly, with the products
and technologies increasingly becoming more configurable and user friendly, and
hence require less IT resources to implement and configure. And secondly,
due to new implementation methodologies like agile, which requires small,
efficient and agile teams. These two factors have made positions like Project
Managers increasingly redundant. Resources at these positions neither do
requirement gathering, nor any testing or consultancy; and mostly do resource
planning and reporting which could be done by various tools.
This was eventually going to happen but the current
jolt to the industry has awaken it to look at all corners to identify
redundancies and save cost and managerial roles are one of such candidates.
But having said that, there are fundamental problems
with Indian IT industry as a whole. How many products that the Indian IT has
created in last 20 years? Where does it stand on the pioneering new
technologies? Indian IT industry has always been way behind the curve on
innovation and strategic thinking.
Indian IT has always worked around and on the
products and technologies that are created in the west and has built armies of
IT engineers to do development, testing, and support for these. Being purely
service oriented, the growth of IT industry has always been dependent on number
of people it can put on the above stated roles and bill it to their customers.
To describe this model to my friends inside and outside of IT industry, I use
this analogy:
Every IT worker is like a taxi with a meter on it.
And the idea is to get the meter running. And how do you do that? you carry
passengers. As over the years the number of passengers increased, more taxis
were put in place to fare the passengers. The model seemed to have worked so
far and revenue depended on the number of taxis running; more the taxis, more
the revenue. Now a new driver-less train has come to the market, which can carry
more people and doesn’t need a driver. What happens to the existing fleet of
drivers? Do they lose their jobs?
And that's why the Indian IT industry couldn’t
delink the revenue growth with the number of employees as there is a direct
correlation with revenue and employee base in the current model. This
will not change until we have world class IT products being created by the
Indian IT.
The IT industry must seriously invest
more on R&D (and not just think of the billability of each resource) to
create new ideas, products and solutions. Think of what would work in next 5,
10 and 20 years and plan along.
So, in conclusion, it is definitely not an end of the Indian IT but yes, a large-scale disruption is in order and a chance for Indian
IT to adapt, change and be ready for the future.
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