Indian IT giants, such as TCS, Infosys, Wipro, HCLTech, and others, are arguably still testing the waters before going all-in with generative AI. They have long been considered global powerhouses and were the primary reason behind cloud adoption in the Indian workforce. Yet, tech companies have focussed less on innovation and R&D over the past decade.
Currently, the IT industry is focused on maintaining existing projects, rather than building something revolutionary. A primary reason for this reluctance is that investing in R&D requires far more capital than simply pushing existing solutions in the market.
While large multinational companies, such as Microsoft, IBM, Oracle, Adobe, and Intel, have all established R&D centres in India, Indian IT lags behind. Also, patents by revenue saw the largest gap between global and Indian firms – global companies had 13.1x patents by revenue compared to Indian players.
Mohandas Pai, the chairman of Aarin Capital, told AIM that it has always been ideal for Indian IT companies to focus on services. “Indian IT services companies are not product companies,” said Pai.
“Creating an LLM or a big AI model requires large capital, time, huge computing facility, and a market. All of which India does not have,” Pai said, adding that even though Infosys, TCS, and others might have the funds, their focus is to provide vertical solutions, and not horizontal ones like ChatGPT.
Pai said that instead Indian startups and product companies should invest more into R&D, which he agrees is also difficult because investors do not put in so much money.
Buckle Up and Move Fast
In a Reddit discussion, users highlighted that there has been no innovation by Indian IT in the past decade. “The slowdown in IT is because the industry has not seen a breakthrough in over a decade (actually more) among other hundred reasons,” a user explained. The last big breakthrough we saw was cloud computing. The industry is saturated with existing skill sets and there is nothing new out there.
“The worst thing about the Indian IT industry is we barely have any software product companies. We have a few good companies that have an IT component to it, but nothing purely software-based to boast of,” another added.
This has led to the huge concern of us lagging behind in terms of research, and miles behind in the adoption of latest research to create product-based business.
Mrinal Rai, assistant director and principal analyst at ISG, told AIM that according to their Voice of Customer survey, clients have rated their service providers lowest when it comes to innovation and thought leadership. “But innovation that can impact business is not a service provider’s job alone.”
“Cloud computing wasn’t invented by Indian IT providers, but they have helped clients adopt the technology. In fact, Indian IT service providers and IT service providers in general have always shown their adaptability to all new innovative technologies and have helped clients navigate and leverage them for their business,” added Rai.
Regarding R&D, he said that providers are focusing more on it than ever before as they explore potential AI use cases for their clients from different industries. “R&D would call for specialised skills, but I don’t think it’s wise to relate decline in hiring solely to investment in R&D,” he added.
Previously, he told AIM that it is important for IT giants to buckle up and move fast. “Many of these [GenAI] solutions fail to impress clients. Indian IT service providers have long-standing relationships with enterprises and have experience in the specific nuances of a large- or medium-sized business requirement,” he said.
He noted that while clients are largely satisfied with the services from IT giants, the satisfaction falls short of expectations, with cost being the main roadblock.
Lull Before the Storm
Along similar lines, Viswanathan K S, former NASSCOM VP (Industry Initiatives), told AIM that what we are currently witnessing is merely a lull before the storm when it comes to Indian IT building AI products as it requires a large amount of data to build something tangible. “Let’s not get obsessed with services as of now, but build productionisation of services, as the data is only going to grow several times five years from now,” he said.
“We are just waiting for the adoption to take place. The next big thing in AI for the global market would come from Indian IT as we wait for the productionisation of the existing services,” added Viswanathan, and said that Indian IT should currently focus on collecting data necessary for the models.
While speaking with AIM, Tanuj Bhojwani, head of People+ai, said that Indian IT needs to rethink its primary thesis. “With everything shifting towards AI, I think there is going to be more and more expectation of IT services getting better…They have a lot of reinventing to do, otherwise they might get eaten out by a new-age AI-first product company,” said Bhojwani, adding that the ideology of Infosys, TCS, would stay the same.
“Infosys, HCL, and others would have to focus on innovating their business models as companies would start paying for products instead of services,” he added.
This brings us back to the point that Indian IT, instead of building innovative solutions and breakthrough products, is still pushing existing solutions on its platform to drive adoption among the Indian tech ecosystem.
However, even though no innovative product has been built as of yet, many are in internal pipelines.
TCS, Infosys, HCLTech, and every other Indian IT company have hundreds of GenAI projects in their pipelines, which as everyone says, are going to be the next big thing in the global AI market. At the same time, there is still no tangible product coming out of Indian IT right now, which, according to many, is not required either.
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