Suresh Kuruvadi

A bit of historical perspective - India and its educated middle class have long been recognized for their proficiency in a wide array of disciplines, such as science, mathematics, languages, programming, management, medicine, and pharmaceuticals, to name a few. The Indian talent pool is rapidly expanding, with approximately half a million engineering graduates emerging every year. The sheer number of doctors, chartered accountants, lawyers, and other professionals is staggering. Moreover, the quality of these individuals often surpasses that of their counterparts in other nations.

As early as the late 1980s and early 1990s, numerous companies from the West began establishing software development centers in India. This trend was followed by the advent of call centers, BPOs (Business Process Outsourcing), medical transcription services, and more. Some engineering firms also established smaller-scale design houses in the country. Indians also migrated to various countries worldwide, including the USA, the Middle East, Europe, and beyond. The Indian diaspora has proven to be one of the most successful among ethnic groups, often surpassing the achievements of their native populations.

GCCs, or Global Capability Centers, are strategic initiatives undertaken by multinational corporations. These initiatives involve establishing specialized units in various locations, particularly talent-rich India, to manage specific business functions. Among these centers, software development centers are the most popular and typically the largest in scale.

The Why Factor of a GCC

It is in the best interest of any large corporation to prioritize its core business activities and steer clear of distractions, whether essential or not. While technology is an integral part of any business, it requires a significant investment of corporate resources. However, it can still be considered a diversion from the primary focus.

For instance, a company like Levi's or Nike would prefer to concentrate on innovating and marketing their jeans and sneakers. Similarly, giants such as Amazon or Target would prioritize expanding their inventory and market reach rather than developing software to manage their operations or other similar tasks.

Many large corporations establish their own internal IT departments to develop software essential for their business operations at their headquarters. These IT teams closely collaborate with the business teams, understanding their requirements and developing software tailored to their needs. For software that is not deemed business-critical, some companies opt to outsource this work to other software firms located onshore. This approach allows for efficient management of essential software development while also utilizing external expertise for non-critical projects.

Over time, due to cost considerations and a scarcity of talent, corporations began outsourcing their software development needs to software services companies. Many even established their own captive centers, known as Global Capability Centers (GCCs), in India. This resulted in a separation, with core business teams remaining onsite at the parent company's headquarters while technologists worked remotely in offshore locations like India. This physical distance led to a growing gap between the business stakeholders and the offshore software developers.

Current scenarios of GCCs

The geographical separation between software developers in India and business/domain experts in the US/Europe has created significant challenges. Factors such as time zone differences, physical distance, and cultural variations have widened this gap. Often, these gaps hinder effective domain knowledge transfer to the Indian software teams. Consequently, there is a mismatch between the requirements and the implemented solutions. These challenges, coupled with cultural differences, have led to lower productivity levels in software development.

For various complex reasons, offshore development centers often focus overly on software development skills and technologies while neglecting domain knowledge and business understanding. Job descriptions for positions predominantly emphasize technical skills such as Java, Python, Angular, SQL, etc. It is rare to find a job description for a software programmer that explicitly requests domain knowledge, such as experience in banking, telecom, or other specific industries. This imbalance in focus contributes to challenges in understanding and meeting the business requirements effectively.

This resulted in very large software teams. With the adoption of Agile methodologies, countless stories are written to implement small pieces of functionality, leading to endless meetings and discussions under the guise of daily stand-ups, which consume the productive time of developers. The system involves numerous players, such as scrum masters, tech leads, architects, senior/junior software engineers, testers, and others. However, it seems that none of them have a deep understanding of the overall product – its intent, purpose, target users, their requirements, expectations, and the rationale behind adding specific features or functionalities.

Consequently, every programmer ends up blindly implementing a story, assuming that others in the team possess insight into the product. There is a hopeful expectation that scrum calls will resolve these issues, yet everyone in the system seems to be in the dark.

Conclusions

Throughout the conversation, we've discussed the evolution of software development practices, particularly in India's role as a hub for IT outsourcing. We explored how corporations initially set up their own IT departments but later turned to outsourcing and establishing Global Capability Centers (GCCs) in India. This shift resulted in a disconnect between business stakeholders at headquarters and offshore developers, leading to knowledge transfer and productivity challenges. Additionally, we highlighted how offshore development centers often focus more on technical skills than domain knowledge, leading to issues in understanding and meeting business requirements. This has necessitated the adoption of Agile methodologies in large software teams but with drawbacks such as excessive meetings and a lack of holistic product understanding among team members.

Today, the global community grapples with concerns over the impact of artificial intelligence (AI) on humanity. The astounding capabilities of AI have left many in awe, as it seems we are contending with a form of superhuman intelligence. AI has the potential to impact our lives and our world in multiple dimensions, which is difficult to predict. The world would change in ways that may be in the realm of science fiction, a world vastly different from what we see today.

The intention of this article is to assess the impact of AI on one critical facet of our lives, that is, “what will happen to our jobs.” While this article won't offer definitive answers, it aims to provide insights to gauge what the possible scenarios could be. To do so, let's delve into history and examine how technological advancements have shaped job markets and businesses over the centuries.

Every individual, when tasked with a responsibility, relies on four essential faculties to effectively accomplish the objective. To illustrate, I am taking a simple example of pushing a car:

Physical strength - the capability to exert significant force to push the car.
Physical skill - understanding which part of the car to grip and push, as well as determining the appropriate amount of pressure to apply.
Analytical skills - the ability to identify and assess parameters that ensure the car is movable, like checking if the handbrake is disengaged, the gear is in neutral, and steering to the direction required.
Creative skills - deciding whether to push the car independently, seek assistance from someone else, hire a tow truck, tow it with another vehicle, jump-start it, or call a mechanic, etc.

In addition to these four faculties, there exists a fifth aspect, which, though not a faculty in itself, I.e., the purpose or motivation behind moving the car.

Before the Industrial Revolution, a couple of centuries ago, all work needed either human or animal power, whether it was spinning thread, weaving cloth, mining, transportation, etc. During this age, a physically strong person was a valuable resource; weaklings would have had a tough time earning a decent livelihood. During this age, Physical energy was the primary requirement for most jobs.

With the emergence of steam power, the internal combustion engine, and electricity, physical energy began to recede in importance. Individuals were now expected to acquire proficiency in operating machinery, making physical skills—such as dexterity with hands and legs—a primary necessity. This proficiency was essential for tasks like operating lathes, driving vehicles, operating power looms, and operating cranes/earth-moving equipment. The most adept individuals ascended the corporate/social hierarchy; for example, a tailor being able to use a powered sewing machine earned more than one who could handle a manual counterpart. This era persisted until the mid to late 20th century.

From approximately the 1970s onward, with the advent of transistors, computers emerged as the next major technological revolution. Tasks previously performed by skilled workers were gradually taken over by computers and automation. Thanks to computing power, we could automate skill-based manufacturing processes in factories. Today, it's possible to run an entire automobile manufacturing line with just a handful of personnel. This era gave rise to a new category of workers: software engineers while pushing skilled workers and their physical abilities to the sidelines in the industrial sector.

Nowadays, we no longer require ticket counters at railways/bus stations/cinema halls, and we don’t need stockbrokers or bank branches with tellers/clerks. These jobs are gone; these functions can all be efficiently handled through software applications over the Internet. The development of such software and hardware demands strong analytical skills, making analytical skills a cornerstone in our contemporary world. In academia, a person's analytical abilities are tested through assessments like the GRE, GMAT, SAT, CAT, JEE, etc. The individual capable of analyzing problems effectively and writing optimal code often commands the highest salaries. Consequently, the computer industry, along with the software and hardware sectors, experienced a significant boom, creating millions of jobs.

Fast forward to 2023, with Chat GPT being made available to the public, the age of Artificial intelligence has begun, and the power of AI has been unleashed, creating a fear that human intelligence is now obsolete and that machines will take over the world. Today, AI can write all the code you need in any of the computer languages. It can design machine components, create prototypes when connected to the 3D printer, etc., and AI can develop an entire mobile app on its own today. The analytical skills of the workforce today are becoming obsolete.

So the question is, what kind of skills will be required in the world of AI? What kind of skills does the industry need to look for going forward, and how can the industry leverage AI? Should the industry let go of its current workforce? What skills do individuals need to master to be relevant to companies adopting AI?

The machines and AI still lack the capability to determine what application or product needs to be created. Consider a stockbroking app, for instance. AI cannot decide whether the app should solely focus on trading stocks or also include features for trading in mutual funds, futures and options, commodities, etc. Furthermore, AI cannot determine how to incorporate the Logo of the company into the color scheme of the UI, establish brokerage charges for different types of trades, offer discounts to premium customers, define who qualifies as a premium customer, and so forth. All these decisions need to be made by the person developing the app showcasing the CREATIVE SKILL required in the AI-driven world. Creativity emerges as a vital aspect of industries’ trajectory. The CREATIVE abilities of employees lie in defining products with the optimal blend of functions and features that cater to market demands, generating revenue for the company. In today's landscape, individuals must grasp customer expectations, market constraints, pricing parameters, system limitations, and other factors to ‘craft a comprehensive functionality list for the product.’ Once this list is established, AI can assist in generating the app accordingly. (A potential counterargument may arise suggesting that AI possesses creative capabilities as well. However, delving into the creative aspect of AI is beyond the scope of this article.)

The fifth aspect hinted at in the article above is the PURPOSE or the WHY factor. PURPOSE can never be defined with artificial intelligence or any super-intelligent systems of the future. The purpose of a product is elucidated by the user of the product. Only the user knows the PURPOSE. Only human beings understand why they need a particular feature or functionality in a product. Companies can introduce new products serving a new purpose to potential customers based on this understanding.

With this, I am concluding the article by underscoring the enduring significance of human creativity and understanding in product development, particularly in discerning purpose and features. It emphasizes that while AI can automate tasks, it falls short of comprehending the deeper "why" behind user needs, reaffirming the indispensable role of human insight in driving innovation. As of today, machines have not taken them over yet. 

You can now breathe a sigh of relief!!

This article focuses on Bharath's non-tech manufacturing and service industry.

Technology has become ubiquitous; it has pervaded all industry verticals and personal spaces as well. Industry tech and personal tech are no longer separate worlds; they have blended seamlessly and are now a continuous fabric. The world of tech is moving at a breakneck speed, and the non-tech industry is facing challenges in catching up; this is especially true in India. To add to the woes of the Indian industry, the Modi-Govt is infusing high(est) tech into the life of every citizen in our country, much to the amazement of the tech leaders and the governments of the West.

Where does all this leave our country's traditional industries and service sectors?
And what about the technologies adopted currently?

We will address these questions in this article.

Most of the manufacturing sector adopts an ERP from popular vendors like SAP, Oracle, People-soft, etc., to manage their supply chains, distribution, inventory management, HR, finance, etc., and Financial sectors like Banks use a Finacle or Flexcube. State corporations in the transportation sector have not adopted much tech (with the exception of railways and metros) or have just started introducing tech. In terms of technologies in the actual production line, sophisticated machinery has been deployed, automating a very large part of manufacturing, primarily with imported machinery.

While India-based startups serving the Indian markets, largely in the service industry, the likes of Ola, Zomato, Flipcart, Swigy, Myntra, etc., designed new and innovative business models and developed their own software, ground up, have large teams of highly paid software professionals, constantly modify their software to the changing/fine-tuning of their business models, making their businesses highly Scalable and quickly adaptable to different business scenarios, changing requirements over time, geography, product lines, festival events, etc.

What are the repercussions of the above scenario?
The cost of technology in the balance sheets of the companies is increasing by the day. These software products are becoming the guts of our business. The companies providing the software understand that and try to exploit the situation. Making changes to the software to adapt to the changes in business processes is painstakingly slow, expensive, risk-prone, and, most importantly, lack of control, being heavily dependent on the software vendors. This makes business processes inflexible, making it difficult to compete with the changing world. Another issue is that whatever solution you are trying to implement here gets passed on to your competitors, resulting in losing the market edge.

New-age startups are at an advantage here and are demolishing the traditional industries’ business structures. Startups are able to constantly adapt to the business landscape by modifying the software by their own teams. There are no IP hurdles, no external dependencies. It's their own technology. This gives them the ability to define and redefine the business landscape and adopt the technology to beat the competition. That’s how they have become Unicorns.

So what’s that we have to do?
Every company should identify the technologies critical to its business, make decisions on which technologies to develop internally, assemble a strong Research and Development (R&D) team,  and provide the required capital. Cultivating a research-oriented culture within the organization is crucial. These are significant decisions, so the full support of the board is necessary, and key stakeholders must be convinced. It's important to note that technology inherently involves high risk; there may be several challenges along the way, and sometimes, the expected impact of such endeavors may not fully meet all intended goals. The organization, at all levels, should be prepared for these possibilities.

Creating new technologies can be costly; even a seemingly simple app can require a significant investment. Developing our own technology, rather than opting for a ready-made solution from a third party, can indeed be prohibitively expensive. However, it's important to recognize that, in the long run, proprietary technology has the potential to deliver far greater impact and value over time. This approach helps create a niche playing field and builds a substantial barrier to entry for your competitors, one that only strengthens over time.

Developing technologies and solutions within organizations is not a one-time event. It's not akin to purchasing a large machine and commissioning it, and that immediately starts producing goods and, in turn, revenues. Rather, it's a continuous process, more like a snowball rolling down a snow-capped mountain; once it gains momentum, it can trigger an avalanche. A technological avalanche that is nearly insurmountable for competitors. The competition will simply fade away, as seen with companies like Kodak, Nokia phones, Motorola, etc.

On the other hand, companies like 3M thrive on internal innovation, constantly introducing innovative products to the market. In the case of 3M, it's challenging to identify who the competitors are, and even if they are identified, they pale in comparison to 3M's products. Take, for example, the seemingly simple-looking search bar on Google's web page. Behind its unassuming appearance lie incredibly powerful technologies that no competitor has managed to match. These technologies may not be visible, but their impact is profound and unmatched.

Our country’s examples, like UPI, Aadhar, and IRCTC, are unparalleled globally. UPI has disrupted traditional payment systems, overshadowing credit/debit cards and payment gateways. It is poised to replace RTGS/NEFT/IMPS eventually and is even challenging international wire transfers. This showcases the power of homegrown technology.

Last but not least, artificial intelligence is going to disrupt many industries. These disruptions are going to be serious and can bring a company and its business models to closure. While we develop our own technological solutions, AI can be a big brother who can help us. Incorporating AI into our R&D roadmap is now crucial.