Bengaluru: IPsoft, the New York-based company that uses artificial intelligence to manage computer networks, is betting big on its cognitive platform Amelia, which it says has reached a scale where it can work directly with the largest global corporations.

The company, founded by Indian-born Chetan Dube, is in the midst of setting up a separate business division to work only with the world’s biggest banks to help the company extend the reach of Amelia.

Until now, IPsoft booked revenue—which it does not disclose as it is a privately-held firm—through partnerships with outsourcing companies such as Accenture Plc. But over the last six months, the company won small deals—in the range of $10-25 million—from companies including British bank Barclays Plc. and telecom firm Vodafone Group Plc.

“When we started, we needed service providers. But now, we believe we don’t have to rely on them only," said Dube, founder and chief executive officer of IPsoft. “We believe we have reached to the point where some of the most respected companies across industries want to work with us directly. This embrace of cognitive computing by corporations is happening faster than we had anticipated."

Until recently, virtual assistant Amelia had been used by companies including Accenture to do the work of call-centre employees and back-office accountants. But with its most advanced solution Amelia version 2, which it unveiled in October, the management at IPsoft said it had crossed a “milestone" where, thanks to the “episodic and semantic memory", the computing product works exactly the way a human brain works.

“In these challenging times, when every organisation is looking to keep costs down, enterprises are realizing that they need to go digital, which effectively means providing best customer experience and at the same time, keeping costs down. Banks are recognizing that unless they climb the curve of digital Darwinism, they will have this existential threat and be wiped out," said Dube, a former New York University mathematics professor.

The rationale behind IPsoft setting up an exclusive division for banks is because globally big banks are the biggest spenders on technology. Banks and insurance firms account for about a quarter of revenue at Infosys Ltd and 40% of revenue at Mumbai-based Tata Consultancy Services Ltd.

As most banks are looking at their information technology (IT) vendors to help automate a lot of their internal processes, IPsoft believes Amelia will help these large banks manage all their processes—from managing IT infrastructure to understanding the credit history of a customer when he applies for a loan.

“Barclays is just one of the examples of a bank which is looking at someone to not just manage their technology infrastructure but at someone who can help them do all the paperwork, right from validating a credit history of a customer, to approving of a loan process in less than 24 hours," said Frank Lansink, chief executive of IPsoft Europe.

“In this process, a cognitive agent like Amelia interacts with a customer"

Healthcare and telecoms are two more industries which IPsoft says offer opportunities for Amelia although for now the company ruled out setting up a dedicated unit for each of these segments.

IPsoft concedes that many of these deals it has won are small in size but expects these to grow as more companies embrace automation and artificial intelligence-led platforms.

For now, the company has already put in place a team, including hiring from consultants Mckinsey & Co., to oversee the unit that caters to its clients in the banking space.

IPsoft has won $20 million deals from banks, such as Barclays and Dutch financial services firm ING Groep NV, a third executive from the company said, on the condition of anonymity.

“We will still be keen on partnerships but it will be with companies like Accenture and McKinsey because it helps us in getting a wealth of transformation and make Amelia learn. Also, then these service providers can also help in implementation of Amelia," said Dube, who said that for a large entities like Barclays, it takes up to six months for rolling out Amelia.

“IPsoft is building out vertical capabilities by hiring experienced management consultants who can represent the ever evolving cognitive capabilities. As IPsoft is aiming to find traction for its Amelia platform that is geared toward more business process-centric scenarios, client engagements get more holistic in nature and thus require enhanced sales capabilities," said Thomas Reuner, managing director of IT outsourcing research at HfS Research.

Dube declined to share details of IPsoft’s commercial agreements with clients but the third executive cited above said IPsoft charges at least $10 million in fees for installation of the Amelia platform.

IPsoft then works on an outcome-based model, in which the company takes half of the revenues from the promised savings made by a client. So for example, if a company saves 50% on costs after deploying the Amelia platform, IPsoft pockets half of the savings.

IPsoft is also in discussions with SoftBank Robotics Corp., the robotics joint venture of SoftBank, to help embed Amelia 2 in the humanoid robot Pepper, Mint reported on 9 December.

IPsoft’s decision to have a standalone division for banks explains why over the last 12 months homegrown IT firms have unveiled their own smart technology platforms.

TCS launched Ignio while Infosys has Infosys Automation Platform and the country’s third largest software firm, Wipro Ltd, is aggressively looking to scale up business from its platform, Holmes.

IPsoft’s move to engage with big banks directly, for now, does not seem to be worrying news for homegrown IT vendors, according to some experts.

“It is just life as per usual...New companies and propositions emerge, many of them will be acquired. Having both direct and indirect business is normal, just look at SAP or Oracle. The question should probably more be whether IPsoft could evolve into an ecosystem play like Salesforce and Workday. However, wherever there is an opportunity that might require partnering, opportunism will prevail," said Reuner of HfS Research.

Close