India leveraging AI technology to make gains

Subir Roy

Senior Economic Analyst

ARTIFICIAL intelligence (AI) is proving to be hugely beneficial to the Indian information technology (IT) services sector. The sector is developing tools and systems that it is passing on to clients across the world to enable them to reap the benefits of the rapidly emerging and maturing technology. This is becoming a new and critical line of product offerings that will enable the sector to remain at the forefront of emerging technology, grow fast and continue to be highly profitable.

AI simulates the cognitive processes of the human brain, and generative AI (GenAI), on being fed enormous amounts of data, produces on-demand speech, text, images, audios and videos. These are critical for the country, as its technology sector earned substantial revenue of $254 billion in 2023-24, up 3.8 per cent from the previous year. Out of this, exports accounted for $200 billion (nearly 80 per cent); technology exports accounted for 28 per cent of the total exports.

Even as the Indian technology sector is helping its global clients use the newly emerging AI and GenAI to take it forward, it is developing tools and products for its own use, enabling it to cut costs and raise its efficiencies multifold. AI, in fact, has become critical as it is enabling the software sector to remain relevant and go forward technologically.

Infosys is a leader in reimaging work, workplace and workforce by leveraging AI so that it is able to get more value out of its staff. Not just Infosys but other IT leaders, such as HCLTech and LTIMindtree, have taken on board Copilot, Microsoft’s AI-based conversational chat interface.

Infosys has also incorporated the GenAI learning process into its platform, Lex, and it is being actively adopted by its employees. Additionally, an AI knowledge assistant of a higher order has been rolled out to all the company’s leaders so that they can bring about improvements in the firm’s sales process. As a result, processes that could take weeks can now be completed in days.

Tata Consultancy Services (TCS), IBM and Wipro are following the same route. They are adopting AI processes in areas like human resource management, automating IT infrastructure and driving sales. IBM finds that, as a result of adopting AI in its own processes, it is able to raise value creation per unit of time by as much as 70 per cent. What is more, by becoming the first user of the GenAI processes developed by it, the vendor is able to debug the process and pass on a much better offering to its clients.

TCS found that the first step — getting its employees to understand GenAI — was in itself a big task. This is partly because as many as three lakh of its employees have by now been trained in basic AI skills.

Wipro is going through a process of using an AI-powered enterprise chatbot to handle business queries, automate tasks and provide information to employees to enable them to do their work better. It is being used by companies in 53 countries to improve their knowledge management and boost productivity. The chatbot typically responds to employees in five seconds and is 95 per cent accurate.

GenAI is also helping another major part of software services, business process management (BPM), which responds to customer queries to deliver better and at a lower cost. With the use of GenAI, till now the main vehicle of BPM delivery, the call centre will be required only minimally. If things keep going this way, in the not-too-distant future, only a few centres will be needed to handle incoming calls. Technology should be able to predict incoming calls and proactively address customer concerns. With the use of GenAI, many Indian BPM companies have been able to shift away from low-end voice-based services. As a result, some of this work has shifted to the Philippines. Firms in India are now using AI-driven chatbots to handle a lot of their work, which earlier used to be handled by their staff.

As Indian IT firms train their staff to handle GenAI for their work and deliver it to customers, the level of skills in the country is rising rapidly. This has caused a sharp rise in the operations of captives, or, as they are now called, global capability centres (GCCs) of international players. Many of these are now focused on areas like engineering research and development. Over time, more and more of the new models of cars of global players like Benz, which are now mostly made up of electronics, are being developed at their Indian GCCs. There are now around 1,600 GCCs in India, with around 50 added last year.

There is little doubt that the Indian IT scene has graduated to a higher skill level with its adoption of AI and GenAI. This has enabled it to keep pace with the global development of technology and improve its value addition. This is likely to enable Indian IT services to continue to hold the preeminent position in the global marketplace that it does today. What began as an entity that was able to get low-paid engineers to write computer code cheaply is today keeping pace with the development of the latest phenomenon in information technology, GenAI.

The impact of this on the Indian economy will be twofold. The IT services sector will continue to be a top foreign exchange earner, thus bolstering the economy as a whole and allowing it to import the machinery needed to start high-end manufacturing being encouraged by the production-linked incentive scheme. Simultaneously, the country’s IT companies are themselves becoming more and more valuable and focal points for inward foreign direct investment. The powers that be have set a target of making India a developed country by 2047, but in the IT space, it has already acquired ‘developed’ status.

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