Wipro Ltd will use its artificial intelligence platform Holmes to automate several aspects of its so-called fixed-price projects, saving up to $46.5 million and freeing around 3,000 engineers from mundane software maintenance activities.
The move is part of Wipro’s larger plan to generate $60-$70 million in revenue by selling the platform to new and existing clients in the current financial year.
A Wipro spokesperson declined comment.
About 30,000 of Wipro’s workforce of 110,000 work in fixed-price projects.
New chief executive officer Abidali Neemuchwala has set an ambitious target for Wipro— more than tripling its revenue growth to 12-14% for fiscal 2017.
“Hyper-automation is one of the six themes Abid has outlined. We will move out 1,300 engineers on on-site (fixed price contracts) and about 2,000 people from off-site this year,” said an executive briefed about the development.
The person did not want to be named.
“We have seen good traction from Holmes and across industries, we are seeing early benefits,” said the executive, adding that automation is one of the central pillars of Neemuchwala’s vision of making Wipro a $15 billion firm by 2020 with an operating margin of 23% (versus 20.5% currently).
In fixed-price projects, a client and IT vendor agree on a price, with the outsourcing firm having the final word on the number of people to be deployed on a project.
Wipro’s push to monetize Holmes and use it to save costs, and thereby arrest falling profitability, comes more than a year after it launched the platform.
The move also comes at a time when Indian IT vendors’ traditional approach of outsourcing work to cheaper locations is under pressure, as automation platforms and cloud computing erase the labour arbitrage enjoyed by these firms.
“The suggestion on the large number of personnel being freed up by the emergence of intelligent automation underlines the disruption that is about to hit the supply side,” said Thomas Reuner, managing director of IT outsourcing research at HfS Research.
Wipro’s larger rivals Tata Consultancy Services Ltd (TCS) and Infosys Ltd are also relying on their intelligent platforms, Ignio and Mana, respectively, to improve their profitability and revenue per employee.
TCS is looking to increase by 20% the revenue per employee in its IT infrastructure division by automating tasks previously done by engineers. Infosysexpects the productivity boost tied to automation and artificial intelligence to reflect in a meaningful way from April 2017.
Holmes, or “heuristics and ontology-based learning machines and experiential systems”, is an intelligent platform which promises to bring efficiency for clients by reducing errors. Additionally, it helps Wipro save on wage costs by deploying fewer people to complete a task.
For instance, Wipro is using Holmes to help large banks approve and process loans quickly. The platform extracts a new customer’s information, performs a cognitive search comparing the credit history with the bank’s other customers, authenticates and validates the loan process.
However, don’t expect Holmes to change things for Wipro overnight, cautioned some Wipro executives and experts.
“Freeing a few people in the delivery side of business will be easy than, say, generating more business from selling Holmes,” said another executive on condition of anonymity.
“Most service providers still don’t have clear ideas as to what will happen to those people being freed from current tasks: will they be re-skilled, re-badged or will there be even redundancies?” asked Reuner. “In all likelihood, it will be a mixture of the three.”
While automation has started to feature prominently in the earnings calls of many Indian IT services firms, most of them, including Wipro, remain tight-lipped about the details.
“We need a more honest and open debate about the transformation of knowledge work. Many tasks and jobs will disappear while new jobs, often highly analytical, will be created,” Reuner said.
His worries aren’t unwarranted.
For the first time in over two decades, two of India’s five largest software services firms, Wipro and HCL Technologies Ltd, reported a net decline in direct hiring. Meanwhile, Tech Mahindra Ltd saw a decline in its existing workforce in the January-March period.