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Increasing business resilience and customer retention are among the top business objectives for using AI by Indian enterprises: Sharath Srinivasamurthy, IDC

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Almost 50% of Indian enterprises consider accelerating move to cloud-native applications and agile development as one of the top three most important IT outcomes from their digital infrastructure resiliency efforts over the next two years, shares Sharath Srinivasamurthy, Research Director, Enterprise Solutions & ICT Practices, IDC.

How can Indian enterprises scale their digital transformation journey with advanced AI and automation? How far do you think the Indian enterprises have come in their AI adoption journey?

 The accelerated adoption of digital transformation (DX), along with the COVID-19 pandemic, has become an important driver for AI adoption across multiple industries. There is an increased need for businesses to collect, process, and leverage data for real-time decisions. Enterprises are sitting on massive amount of data and need for making sense of data is critical. Transformation initiatives around big data and analytics are helping enterprises to look at their customer and operational data with a different lens to drive targeted campaigns, develop new products and services and optimise operations. Technologies around RPA are helping enterprises automate a lot of manual tasks and keep operations going even when employees were not physically present in office.

Taking these technologies to the next level, AI and ML based solutions are helping enterprises take intelligent decisions. The artificial intelligence (AI) market in India is expected to grow at a five-year CAGR of 20.2 per cent and touch USD 7.8 billion in total revenues by 2025, according to IDC. Indian organisations plan to invest in AI to address current business scenarios across functions, such as customer service, human resources (HR), IT automation, security, recommendations, and many more. Increasing business resilience and enhancing customer retention are among the top business objectives for using AI by Indian enterprises.

As part of resiliency measures, hospitals have adopted telemedicine and robotics to redefine care delivery and triaging. Many of these systems are embedded with AI solutions. Although hospitals initially faced delays in COVID-19 testing, they relied on AI-based diagnostic solutions for prompt and accurate results. Finance and insurance fraud–related activities have increased at a rapid pace over the years. AI-based fraud analysis and investigation solutions are being leveraged to reduce the same. Many enterprises leveraged AI/ML solutions for suggesting complementary products to users considering consumer demographics, sales, product, and financial information. Also, video-KYC and automated customer agents have become one of the popular use cases in the BFSI segment. Manufacturing firms are leveraging AI for inventory predictions based on changed consumption patterns during the COVID-19 pandemic. They used AI to predict demand, reduce time to market, and right size their inventory across the supply chain. To effectively scan passengers for COVID-19 symptoms, the government adopted AI-enabled thermal and vision cameras, which not only measured forehead temperatures but also detected face mask and social distancing violations.

 Could you elaborate on the role of containers, with cloud-native applications being instrumental in digital transformation?

The past five years have seen a rapid evolution of technologies that are collectively known as cloud-native. These technologies are instrumental to the success of companies like Netflix, as well as digital-native companies like Uber and others who are disrupting traditional ways of doing business. This shift to cloud-native technology has fundamentally changed the way software development is done today, leading to the adoption of DevOps practices and other new strategies of delivering software with the main benefits of an increase in your team’s velocity that satisfy customer demands and allow organisations to be competitive in the marketplace. Almost 50 per cent of Indian enterprises consider accelerating move to cloud-native applications and agile development as one of the top three most important IT outcomes from their digital infrastructure resiliency efforts over the next two years.

Container technology has evolved as a way to optimise the software development and increase business agility and time to market with new applications. Containers not only aid in new application development but also in application modernisation, especially when refactoring monolithic applications into microservices architecture. Containerisation provides these desirable benefits, combining them with security and scalability. In short, container technology could change the rules of the game for companies looking for digital reincarnation. Around 43 per cent of enterprises in India intend to use containers for more than 50 per cent of their projects in the next 18 months, according to IDC’s 2020 Asia/Pacific (Excluding Japan) (APEJ) Software Survey.

What are your views around increasing numbers of GCC’s (Global Captive Centres) in India? How can the IT industry leverage the associated benefits?

According to NASSCOM, India has around 1,300 GCCs employing 1.3 million people. While GCCs provided cost arbitrage for parent companies, they have evolved to become the technology hubs for experimenting on new age technologies and solutions. The ability to scale and availability of skilled manpower on digital technologies will continue to make India the preferred destination for GCCs in coming years. Technologies like cloud, artificial intelligence (AI), machine learning (ML), RPA and blockchain are being leveraged to run engineering and R&D activities at GCCs. On the other hand, the IT industry has invested in building expertise in digital technologies. This gives immense opportunity for IT industry to become technology partners for the GCCs and work on joint solutions. Both GCCs and IT industry can benefit by working on areas of synergy.

Share your views around the fast-growing Indian IT industry? What can IT firms do to become more resilient, in the post-pandemic world?

According to IDC Black Book Live Edition (Sep 2021), global IT spending is expected to increase sharply in 2021, with a projected growth rate of around 9 per cent in 2021 and is expected to grow at a healthy CAGR of 6 per cent over the next five years. The momentum software segment will be primarily driven by applications software that includes collaborative, content, workflow and management, and enterprise applications. The driving force behind the growth of IT services will be primarily design and managed services, which include application development and management, integration, IT outsourcing, hosting infrastructure services, network and endpoint outsourcing services. Adoption of digital technologies related to cloud/upgrade/migration, customer experience, automation, next generation, security, artificial intelligence, IoT, etc. will become more and more widespread in the coming years.

Indian IT industry has shown great resiliency during the pandemic ensuring the clients and their operations are not affected. Resiliency is a continuous process.

IT firms need to do the following to continue to be resilient in the post-pandemic world:

As technology firms have demonstrated resiliency across all aspects of business, people and processes, it is necessary to make sure the actions taken are sustained over long term. The new BCP (Business Continuity Program) paradigm will be the new normal and should be regularly tested and improvised. It is advisable to be ready to handle similar situations in future effectively.

People will play a critical role in driving the next wave of growth in the industry. The empathy-based approach that the industry has taken towards taking care of employees need to be sustained.

Reskilling of workforce needs to be accelerated as digital adoption across the globe increases. Talent management becomes extremely critical and demand of people with digital skills are set to increase which might have an impact on the bottom-line. It will be a tight rope walk for technology companies to get the best talent while keeping costs under control.

Partnerships are critical in digital economy. The pace and nature of digital transformation that we are seeing need multiple payers to join hands to deliver best in class solutions to business problems. It is important to forge right alliance to complement existing skills. Customer, employee and organisation data are extremely critical. With increased adoption of hybrid work model, cloud-based solutions and variety of devices accessing enterprise applications, it is important to keep security polices up-to-date.

With IT firms eyeing hybrid working model, what are your views around major technologies that will disrupt the sector?

2020 has been a year of many changes and certainty technologies are no longer seen as a vehicle, they have become much more integral. The industry has successfully transitioned to a new hybrid operating model with very little downtime for global customers who have convincingly proven the strength of the Indian IT industry.

Over time, technology firms will settle for hybrid working while the percentage of employees working from home will vary based on the organisation. The industry has not seen a dip in productivity even when employees were working from home. It would be ideal to provide flexibility to employees with right checks and balances in place to ensure they are motivated.

Some major technologies that will disrupt the sector are:

The shift in enterprise spending toward digital and cloud services is likely to increase. Total worldwide spending on “whole cloud” that includes cloud services, the hardware and software components underpinning the cloud supply chain, and the professional/managed services opportunities around cloud services – will surpass US$ 1.3 trillion by 2025 while sustaining a compound annual growth rate (CAGR) of 16.9 per cent according to IDC.

AI transformation presents a strong growth opportunity for the technology industry. Worldwide revenues for the AI market, including software, hardware, and services, are forecast to grow 16.4 per cent year over year in 2021 to US$ 327.5 billion. By 2024, the market is expected to break the US$ 500 billion mark with a five-year compound annual growth rate (CAGR) of 17.5 per cent and total revenues reaching an impressive US$ 554.3 billion according to IDC’s Worldwide Semiannual Artificial Intelligence Tracker.

Global spending on Big Data and Analytics Solutions will reach US$ 215.7 Billion in 2021 as enterprises focus on solutions to enable faster and better decision making across all industries according to IDC’s Worldwide Big Data and Analytics Spending Guide (Aug 2021). Leveraging data for decision making for internal business operations and customer engagement are of strategic importance for enterprises globally.

Building digital trust across the ecosystem has become a defining indicator of a successful digital transformation journey. Enterprises are accelerating their investments in cybersecurity solutions on back of the increased threats during the pandemic.

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