Outsourcing business will decline further; it will do more with less people; see what this means

By: | Published: September 4, 2017 3:28 AM

The executive vice-chairman of Cognizant India shares with Sushila Ravindranath that outsourcing, which is 80-90% of the total business today, will come down to 50-60%, and digital will account for the rest.

Outsourcing business, outsourcing, Cognizant, NASSCOM Illustration: Shyam

I have been trying to fix lunch with Chandra, as R Chandrasekaran, the executive vice-chairman of Cognizant India is known, for many weeks. With his travel schedule, it has been near impossible. As one of his trips gets postponed, he agrees for a quick lunch at the Mahamudra, Isha Foundation’s spacious and bright vegetarian restaurant in Mylapore, Chennai. As it is a favourite of us both, we don’t waste much time ordering. We ask for their tiny crisp banana flower vadas and iced lemon tea.

Chandra is one of the professional co-founders of Cognizant, which was established in 1994. He is also a long-standing member of the Executive Council at NASSCOM, the Indian IT industry body, and was its chairman during 2014-15. He has been a member on the Board of the NASSCOM Foundation, its social arm, and has played a major role in the National Digital Literacy Mission (NDLM) initiative. He is a passionate advocate of skill development and employability, and works closely with educational institutions in making the curriculum relevant for today’s industry needs.

I have been wanting to talk to him about his take on the transformation that the IT industry is going through—all the things that are making headlines, such as artificial intelligence (AI), Internet of Things (IoT), machine learning, deep learning and so on. There are reports saying that the IT services industry alone is set to lose around 6.5 lakh low-skilled positions to automation by 2021.

As we wait for the starters to arrive, I ask him about the jobs being lost. “The world needs 15-18 million people in the IT industry. There are 6-8 million job requirements in the digital and new technology area. Even if we aspire for 15-20% of these, it means 1.5-2 million jobs. India is not in a bad space. It depends on how agile we prove to be. We have to shift gears, and work on scaling up and creating talent,” he says.

Chandra adds that innovation time is shrinking. “The agricultural revolution lasted for centuries. Industrial revolution lasted one century. Information technology revolution lasted 30-40 years. And internet revolution lasted barely 15-20 years. Now is the time of IoT, AI, machine learning and related revolutions. How quickly you spot the change will make a difference. Once you could make a career out of Cobol programming for 30 years. To survive today, you have to unlearn and relearn new skills. At the same time, there are many opportunities. We must make adjustments faster. It’s not the first time that the industry has been challenged by innovation. The invention of the steam engine did not stop the creation of new jobs,” Chandra says.

Why is there so much unrest and fear in the IT industry? Chandra says it is unnecessary fear-mongering. “There are more technology and IT jobs now available than ever. Large IT outsourcing firms continue to hire. In the month of June, attrition rates are always higher. A lot of young people change their minds, directions, go for higher studies. There really has been no reduction of staff or layoffs. People are being given the option of golden handshakes. Those who opt out can move on and do other things. Organisations too need to renew talent.”

We decide not to order the thali meal and instead ask for Mahamudra’s excellent uttapams with toppings and pesarattus (whole gram dosas). What kind of new jobs is Chandra talking about?

“Today, every start-up is tech-based. All global companies continue to want a toehold in India. They want to tap the talent here. They are creating jobs,” he tells me. “Today, all end-user organisations are technology dependent. Earlier, technology was not seen as mainstream. Companies had MIS (Management Information System) departments. Now, the demand for technical skills is increasing in government, citizen services, mobile services and many other areas.”

Chandra sees tremendous potential in healthcare. “Doctors per population are so low in the country. Technology can step in. Technicians can be trained to determine results of diagnostic tests. The diagnostic equipment is getting more and more advanced. Patients can be monitored in different locations and information can be passed on. Many more primary health centres and satellite centres can be set up,” he adds.

Technology not only creates jobs, but the quality of work also gets significantly enhanced, he says. “An Ola or Uber driver has to be digitally literate. He has to understand GPS, payment systems. Technology adds value to jobs. The tourism industry can create so many jobs with the help of technology. Geo-tagging can help users find a wide variety of location-specific information from a device. Agriculture is another area where technology can make a great difference. We can actually create more jobs in each sector.”

As we are about to finish the dosas, I ask Chandra about AI replacing humans and overtaking them. “We are going through a transition period. There is bound to be a churn here and there. Any new development has a negative side, sometimes. AI based on self-learning algorithms make the product better and better. People may put it to wrong use. At Cognizant Technology Solutions, we have developed a deep learning algorithm for detection of diabetic retinopathy. After getting the results from 1,000 retinas, it keeps getting better and better. The algorithm defines itself. Machine learning is the extraction of knowledge from data. As we lack enough doctors, these kinds of products are very useful in primary health centres. Technology becomes a part of all of us.”

We ask for Sukku coffee, a concoction made of dried ginger, coriander seeds and palm sugar, instead of dessert. How has Cognizant been able to do better than its peers, based on its quarterly results? “We are in a fairly advantageous position. We moved to digital technology fairly early. We have been making acquisitions to speed up our share of business in the digital space. Our share of digital revenue keeps going up.”

And what is going to happen in the immediate future, according to Chandra? “The typical outsourcing business will continue to decline. We will be doing more with less people. Delivery models are changing. The turnaround is fast, with the next cycle beginning in two weeks. We will retain our margins through the value we deliver. Outsourcing, which is 80-90% of the total business, will come down to 50-60%. Digital will account for the rest. You improve and deploy.”


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