Humanoids, Robots, IPSoft and IT Jobs

Okay, this is going to be long. So brace for it. 

There were two news items recently, and I am going to draw heavily from them for this blog. 

1. Today's mint front page article on IT exporters adding revenue with fewer new employees. 

2. A robotic threat to outsourcing model, here. 

The first one talks about how our IT exporters added more revenue without adding too many employees this year, basically moving towards more earning from higher end projects. The ratio of people with less than three years experience in the IT giants like Wipro, Infosys etc is decreasing, the article no. 1 points out. 

The second one is from the last week, and talks about how....wait a sec...let me quote 

"Robots and humanoids that automate and deliver information technology (IT) projects at a cost that is less than one-fourth the billing rates of engineers from Tata Consultancy Services Ltd (TCS) and Infosys Ltd are the latest threat to India’s $100 billion (Rs.5.5 trillion) IT services business."

Okay, that says it. So there are companies like US based IPSoft (very interesting company website, check it out! Don't miss the Turing centennial post by Chetan Dube, the CEO), who are working on software robots and humanoids that can automate many mundane software development jobs. These IT robots are going to revolutionize the process of software development as we know today. If you are thinking it's fantasy, let me quote this:

"Software robots or algorithms automate the entire workflow, offer solutions in a fraction of the time and at a cost that cannot be rivalled by engineers, based in cheaper, offshore locations such as India and the Philippines. For instance, if a US bank faces issues in running a particular software application, an algorithm or software robot can solve it by sifting through the entire IT infrastructure of the bank within seconds, identifying the cause and fixing the problem. A human engineer would take at least few minutes to identify the problem and another few minutes to offer solutions."

“The economics are eye-popping: while an onshore FTE (full time equivalent) costing $80K ($80,000) can be replaced by an offshore FTE for $30K, a robot developed with the Blue Prism/IPSoft tool kit can perform the same function for $15K or less—without the drawbacks of managing and training offshore labour,”James R. Slaby, research director at HfS Research, said in his October report titled Robotic Automation Emerges as a Threat to Traditional Low-Cost Outsourcing.

So that sums it up. And what are our IT giants doing? Let me quote again:

Already, senior executives at Wipro Ltd, Infosys and Cognizant Technology Solutions Corp. are scrambling to partner with IPsoft instead of losing some existing and even potential projects to the new model. Officials at these companies confirmed they are in talks with IPsoft for a potential alliance, but asked not to be identified citing non-disclosure norms.

So that's one part of the story. The second part relates to the first article. IT companies earning from high end projects. Now let's relate both and do some crystal gazing. What I see is not pleasant. I see a loss of job creation in IT sector. People would like to have more experienced IT professionals, doing high end work, and leaving the mundane software development, which forms the bulk of software development jobs today (ask me, I worked with Wipro and Infy), to the IT robots. And that would effectively mean, higher entry barrier to the new IT engineers/professionals, especially the ones that pass out from not elite institutions. 

What about data/voice and other low end outsourcing jobs? They should be the prime target once algorithms starts passing Turing tests, and trust me, it seems closer than ever, going by what I am reading/hearing. 

Is it all doom now, with bots killing humans? Not exactly. But one has to brace for what might come. The strategists at our IT giants need to look into the future, and think about how to adapt. The current model of being a global provider of services using low wage human workers, has served them well, but they need to move into product development to stay relevant in future. They have tried, but the results are yet to show significantly. It's time our IT sector grows up, into products and solutions that go beyond what can be done by IT robots or low skilled employees. I am sure, the IT strategists (in the IT sector, not the Govt.) know it.  It would be nice to watch this sector in next couple of decades. We sure live in interesting times!

PS: Blame the informal language on beer! Will correct it some other day and remove this PS