The latest threat to the $ 100 billion Indian IT-ITES outsourcing story comes from robots and humanoids that deliver IT projects at less than one-fourths the costs of TCS and Infosys engineers. Robots and humanoids made by IPsoft Inc. and Blue Prism Ltd are rapidly rendering irrelevant the debates about offshoring of software and back-office projects by automating the projects they undertake, and by solving technical glitches at an unbelievable and unmatched speed.
For long, Indian cos. have been hiring engineering graduates and training them. The pyramid model wherein a large number of fresh engineering graduates are taken in, reduces the cost of projects and it has been successfully replicated by International Business Machines Corp. IBM and Accenture Plc., which employ thousands of engineers in India.
But now, relatively unknown start-ups with innovative algorithms threaten to do what they themselves did to IBM and Accenture in the early 2000s. “IT Robots May Mean the End of Offshore Outsourcing” is the headline of an article published on online magazine cio.com that also mentions Blue Prism and IPsoft.
While IPsoft is already snatching business from Indian firms, Blue Prism is now using robotics to manage computer infrastructure for retailers such as Shop Direct Group. The economics are simple—minimal human intervention with the services delivered at unparalleled quality, and there are no annual wage increases, too. For instance, if a US bank faces problems in a software application, a robot can solve it by sifting through the entire IT infrastructure within seconds, identifying the cause and fixing the problem. A human would take at least a few minutes to do the job successfully.
Blue Prism is an early start-up with just 25 employees on its payroll and expects to achieve $10 million in revenue this year.For now, the over $25 billion a year market for managing computer desktops and servers remotely is at stake, with both IPsoft and Blue Prism beginning to make inroads into the business. According to technology researcher Gartner.Inc, 25% IT projects will be automated in the next three years.
Experts say that companies such as Blue Prism can disrupt traditional models of IT services. The economics are eye-popping: an onshore FTE (full time equivalent) costing $80,000 can be replaced by a robot for $15000 or less—without the drawbacks of managing and training offshore labour.The experts add that traditional outsourcing firms have no choice but to partner.Outsourcing customers evaluating options to deploy solutions from vendors such as IPsoft say the potential rewards far outweigh the risks associated with trying a new model.