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| Technology
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| Why Top IT Firms Like Infy and Wipr |
| Why Top IT Firms Like Infy and Wipro Are Changing Course
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| INDIA
, 20-February-2015
6:52:24 AM |
| After decades of low-margin work like server maintenance, India's information technology services firms are moving upscale in search of lucrative contracts for driverless cars and other advanced projects as online innovation changes clients' needs.
Companies from Tata Consultancy Services Ltd to Wipro Ltd are all joining Infosys Ltd in investing in new, high-end technology, industry watchers say. Earlier this week Infosys bought US automation specialist Panaya Inc for $200 million (Rs 1,245 crore) . (Read: Infosys Buys US-Based Panaya for $200 Million)
Triggering change is a wave of invention allowing machines to talk to each other online, dubbed 'the Internet of things'. Customers are ramping up: from about 5 per cent now, strategy advisor Offshore Insights estimates automation and artificial intelligence work will grow to 25 to 30 per cent of an IT outsourcing market seen by the national industry association as worth $300 billion (Rs 18,67,500 crore) by 2020.
"We're in the midst of a new wave of software, and IT services companies really don't have a choice," said R. Ray Wang, principal analyst and founder of Silicon Valley-based Constellation Research.
As well as deals, the prospect is spurring heavy investment. Third-largest IT services exporter Wipro is building computing systems designed to mimic human decision-making abilities, where machines can understand and react to what human beings say to them. HCL Technologies, meanwhile, is using robotics to do away with manual testing of hardware.
Though carrying higher profit margins, the new business lines are not as big-ticket as traditional large-scale outsourcing projects, meaning revenue may be reduced in the short term, analysts say.
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