1 min read.Updated: 03 May 2013, 02:13 PM ISTSunil B.S.
Infosys-IPsoft deal could be a bid by incumbent firms to try and catch the next technology wave with smart alliances
Is a recent deal signed by Infosys Ltd a signal that Indian software services companies have begun to adjust to the brave new world of software written by robots?
Infosys announced this week that it has entered a revenue-sharing agreement with IPsoft, a company that is known to be in the vanguard of replacing human engineers with software robots or algorithms that can deliver information technology projects at lower costs. The deal could emerge as a game-changer, akin to similar deals in other industries such as pharmaceuticals and telecom, where incumbents try to catch the next technology wave with smart alliances.
The deal between Infosys and IPsoft comes at a juncture when doubts are being raised about the ability of Indian software companies to keep powering ahead with cheap labour even as new technology makes automated software writing increasingly attractive.
Gartner Inc., an IT research and advisory firm, expects that one of every four IT projects will be automated in the next three years. By some measure, a robot can perform a software task at around $15,000 a year, or about half of what it currently costs to hire a software engineer in a country such as India.
Kotak Securities Ltd argues in a recent report that the evolving business mix of Indian outsourcing firms means that the traditional focus on hiring cheap engineering talent will no longer suffice. Activities such as analytics or consulting require a different employee profile than the usual cubicle denizen at companies such as Infosys. The competitive landscape is also changing because of protectionist pressures in the US as well as growing competition from countries such as Mexico, China and Hungary.
The Indian software services industry has undoubtedly been one of the biggest success stories of the past 20 years, but the technology wave that it rode could now be petering out. The Infosys-IPsoft deal should be seen as a tentative preparation to catch what could be the next wave, of robots writing software.
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