Bangalore: Chetan Dube, founder of information technology (IT) services firm IPsoft Inc., says automation has the potential to save as much as 80% of costs for companies such as Citigroup Inc. and American Express that farm out work to Indian IT companies.

Top Indian software services exporters need to be more pro-active in using the disruptive automation technologies for servicing clients, said Dube, a former maths professor who founded IPsoft in 1998.

Automation can save more than four times the amount of costs that India’s IT firms achieve through software engineers working on outsourcing projects, and has the potential to disrupt the traditional business model of India’s $108-billion IT industry, he said.

“We’re facing a revolution in the IT sector. In the next decade, autonomics has the potential to completely cannibalize the infrastructure management space," said Dube, speaking at the Nasscom Infrastructure Management Summit 2013.

Automation is widely seen as a disruptive threat to India’s IT sector. Robots and humanoids that automate and deliver outsourcing projects at less than one-fourth the billing rates of engineers and a fraction of the cost are rapidly revolutionizing how software and back-office projects are delivered.

Labour automation could result in up to 60-80% of cost savings for top outsourcing customers, as opposed to 15-30% cost savings from the traditional labour arbitrage model of Indian IT, according to data compiled by the outsourcing advisory firm ISG.

“It’s a massive waste of the human brain to be involved in tasks that can be performed by automation," said Dube.

IPsoft recently sealed a revenue-sharing partnership with India’s second largest software exporter Infosys Ltd. As part of the partnership, the companies will establish a centre to train employees on the deployment of US-based IPsoft’s automation platform IPcenter at Infosys’s Mysore campus. India’s second largest software exporter said it plans to train about 5,000 employees in the next few months.

“The Indian industry is very agile, they’re moving very rapidly because of this change. If it could be more pro-active, then we wouldn’t have burning pressures," said Dube, adding that about 56% of all outsourcing client problems are resolved through autonomics.

For years, Indian IT firms such as Tata Consultancy Services Ltd and Infosys hired thousands of engineering graduates and built large campuses to train them. The so-called “pyramid model" that sees the entry of large numbers of engineering graduates every year brings down the cost of software development and maintenance projects.

However, companies such as IPsoft are rapidly proving to be a threat to that business model.

IPsoft uses software robots to replace engineers on outsourcing projects for top customers such as Comcast, the biggest cable operator in the US.

“Very soon, you’ll pass someone in the hallway and not know whether it’s a human or an android. Androids are coming in a big way," said Dube.

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