Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Industry / Infotech/  TCS, Infosys, Wipro eye new platforms for growth
BackBack

TCS, Infosys, Wipro eye new platforms for growth

Firms see two benefits: a differentiated offering while vying with global peers for contracts, and better productivity

TCS is the second IT firm globally to carve out a separate unit focused on products using disruptive technologies. Photo: MintPremium
TCS is the second IT firm globally to carve out a separate unit focused on products using disruptive technologies. Photo: Mint

Tata Consultancy Services Ltd has set up a new business unit called Digitate dedicated to its recently launched artificial-intelligence (AI) platform Ignio and other next-generation products, and believes it has the potential to become a multi-billion dollar business.

The move makes TCS the second IT firm globally to carve out a separate unit focused on products using disruptive technologies; International Business Machines Corp. (IBM) had set up IBM Watson, an AI supercomputer system, last year.

Ignio does not compete with Watson. The former is an AI-powered software which identifies, diagnoses and learns from issues in the IT infrastructure and automates basic technology work, thereby doing away with the need of engineers. Watson helps clients across industries make sense of large sets of unstructured data sets.

Bengaluru-based IT firm Infosys Ltd also has a products and platforms unit called Edgeverve but the unit has legacy platforms, including the core banking platform, Finacle, which the new management under chief executive officer Vishal Sikka is trying to refurbish.

“The way we have structured this (Digitate) is that each of the products or platforms we come up with should bring in at least half a billion in revenues (annually)," said a TCS executive, who asked not to be named.

TCS has asked Harrick M. Vin, vice-president and chief scientist, and Akhilesh Tripathi, head of sales for Ignio and formerly head of TCS Canada, to oversee Digitate. Ignio is being billed as the biggest technological invention to come out of the $15.5 billion TCS, Mint first reported on 8 June.

“(Currently), we have only Ignio. But then there are different variants of Ignio which are in the works, as currently only infrastructure and BPO (business process outsourcing) clients are using it. But soon we will have Ignio for other service lines. We may also move some of our cloud-based platforms in this division when they reach a certain scale," said a second TCS executive who also asked not to be identified.

Earlier this year, TCS said its cloud-based platforms had clocked an annual revenue run rate of $125 million. A spokesman for TCS declined to comment.

TCS is in the midst of building a team for Digitate, according to the two executives.

“For the coming year, revenue is not the benchmark but (the focus is on) client adoption. But, internally, all revenue has already started being tagged to Digitate," said the first executive, who said that since its launch in June, the company has got six clients using Ignio and that it expects to sell Ignio to at least 25 clients by the end of March 2016.

Indian software services firms have successfully managed to create a $146 billion industry over the past two decades by managing technology requirements of companies across the globe. But as commoditized back-office maintenance work comes under intense pricing pressure, home-grown IT vendors, including TCS, Infosys and Wipro Ltd, which together recorded revenues of over $30 billion for the year ended 31 March, are looking at building new platforms.

IT giants believe this serves two benefits: it helps them have a differentiated offering when they vie for outsourcing contracts against their global peers, and it also helps improve their productivity.

Infosys, which in January unveiled open source data analytics platform Infosys Intelligent Platform (IIP) and followed up with Infosys Automation Platform (IAP), will also launch an Infosys AI-powered platform in the coming months, Abdul Razack, head of platforms, said in a June interview.

For now, Infosys is using IIP in more than 100 projects and claims that it helps clients make sense of large sets of unstructured and structured data while IAP, which is being deployed on a dozen projects, helps automate work. Razack said Infosys expects to generate more revenue from servicing these platforms than merely selling them as standalone products.

Infosys’s cross-city rival Wipro surprised industry experts when it became the first Indian IT services firm to launch an AI platform, Holmes or “heuristics and ontology-based learning machines and experiential systems" earlier this year. Currently, Wipro has about 70 projects running on Holmes and the company expects to offer it to up to one-third of its 1,000-plus clients in the next 24 months.

Wipro, like TCS is doing with Ignio, is also selling Holmes as a standalone product.

With IBM expecting Watson to become a $10 billion unit by 2023, most Indian IT giants are turning aggressive in building platforms. Infosys’ boss Sikka has already outlined an ambitious target of generating $2 billion in revenue from the platforms business by the year 2020, by when the $8.7 billion in revenue Infosys expects to become a $20 billion firm. Currently, the products and platforms business account for less than 5% of Infosys’ total revenue.

Homegrown IT giants do not have any fixed price for selling their technology platforms and are pricing it on outcome-based model under which each client of an IT vendor is promised certain savings when they use the technology platform. Once the client achieves its promised savings, IT vendors get a fee.

The road towards monetizing platforms is a challenging one as four years after IBM unveiled Watson, the company has only got $100 million business from its AI-powered super computer.

“At this point in time, the market is still in its infancy and service providers need to start educating the market on the implications of these," said Thomas Reuner, managing director IT outsourcing firm, HfS Research.

Nonetheless, Reuner said IT vendors are shifting their focus from selling solutions toward supporting an outcome and in this context, “the investments of the industry into intelligent automation should be seen as supporting the journey but less as discrete offerings".

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

ABOUT THE AUTHOR
Varun Sood
Varun Sood is a business journalist writing on corporate affairs for the last fifteen years. He also writes a weekly newsletter, TWICH+ on the largest technology services companies. He is based in Bangalore. Varun's first book, Azim Premji: The Man Beyond the Billions, was brought out by HarperCollins in October 2020.
Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 04 Aug 2015, 12:48 AM IST
Next Story footLogo
Recommended For You
Infotech Stocks
₹1,547.25-0.26%
₹1,484.10.99%
₹4,928.750.15%
₹3,837.51.2%
₹472.21.66%
Switch to the Mint app for fast and personalized news - Get App