#CounterpunchWithSVG E09: Despite Its Battles, IBM Is Confident That Its India Business Will Thrive. Will It, Really?

Reading Time: 25 minutes

#CounterpunchWithSVG crossed a significant milestone yesterday. In this year so far the series has garnered over 30,000 views from over 100 countries. More than anything else, I see this milestone as the best stamp of approval for this format and the value of bringing honest, unfiltered conversations. It also confirms the rather uncomfortable piece of truth that IT decision-makers and the broader IT community are suffering from an overdose of marketing hype and there is a dire need to break away from the glossy dossiers and snappy videos that are mere propaganda mouthpieces. In case you are keen to learn more about this milestone, please follow this Twitter thread.

In this 9th exchange (E09) of #CounterpunchWithSVG, I host Sandip Patel, Managing Director, IBM, India South Asia (ISA). Sandip isn’t new to IBM ISA and was based in India nearly a decade ago and was the then leader of the Global Business Services (GBS) arm of the company. He has returned to India to take up the mantle from Karan Bajwa, who led the business for nearly four years. In this exchange, I grill Sandip about the state of IBM ISA’s business and its future in the face of the changing nature of Strategic Outsourcing deals and changing clients’ requirements. Of course, I don’t let him off the hook without knowing his opinion on how he envisions the new IBM post Arvind Krishna’s decision to split the company into two.

P.S.: For the uninitiated, #CounterpunchWithSVG is an executive dialogue series by Greyhound Research. As the name goes, this series is about sharp, honest, and unfiltered conversations. The format is simple. SVG throws punches at his opponent (asks tough questions that most wouldn’t) and gives his opponent an equal opportunity to counterpunch. In a world full of marketing hype, we at Greyhound Research believe #CounterpunchWithSVG makes an insightful read. We bet you will share our sentiment once you’ve read this exchange!

SVG: Sandip, thanks very much for agreeing to participate in #CounterpunchWithSVG. Truly appreciate it. Can you please highlight how IBM India’s business has been impacted due to the pandemic? And has the company revised guidelines on new deals and cash flows for the remainder of 2020?

Sandip: Thank you, Sanchit. It’s always a pleasure talking to you. Coming to your question, The COVID-19 pandemic did have a temporary impact on the overall market liquidity. We worked closely with clients throughout the pandemic to restructure and extend the commercial terms wherever possible. We will continue to work through this as our clients reset, recover, and revive in a dynamic environment. 

We had to ensure seamless business continuity and provide robust disaster recovery solutions to minimize every client’s disruption. This also included empowering our clients’ remote workforce to be productive and engaged by providing access to tools and solutions. We saw a tremendous increase in demand in technology areas like remote working, security, and cloud computing.

From ensuring uninterrupted banking experience to telco connectivity to facilitating the delivery of essentials, IBM has been supporting clients to extend support and services to India’s citizens during these times of COVID-19.

We are supporting all of this remotely and in collaboration with our clients. Let me dive deeper with client examples:

Indian Oil Corporation Limited, the world’s largest LPG cooking gas services provider, partnered with IBM to deliver essential services to millions during the COVID-19 lockdown. We scaled up LPG supply and distribution software systems to manage the sharp rise in demand for cooking gas. (delivered 2.2-2.5 million refill orders a day). Added new features to the consumer App (IndianOil One) that enabled consumers to locate the nearest Indian Oil retail outlet offering free food, ensuring no one went hungry during the crisis. App downloads exceeded more than 2 million in this period.

IBM has built the Data Centre & Disaster Recovery infrastructure for Mother Dairy’s critical SAP HANA environment. We also provided the Data Centre and Disaster Recovery monitoring and management services through IMC (Remote Management Centre). Also, we ensured 100% monitoring of Mother Dairy’s DC & DR Infrastructure, all devices, successful back-ups, and device physical health reports. We provided 100% availability of the infrastructure and monitored the performance pro-actively for the various systems and subsystems to prevent outages. We also deployed a strong security compliance process adherence, even during the COVID-19 lockdown, and enabled work from home for Mother Dairy employees. 

The National Health Mission, under the Government of Andhra Pradesh, collaborated with us to deploy a virtual agent to provide COVID-19-related information for citizens on the Andhra Pradesh National Health Mission portal of the Department of Health, Medical, and Family Welfare. The Watson virtual agent (called Watson Assistant for Citizens) on the IBM Public Cloud brings together Watson Assistant, Natural Language Processing capabilities from IBM India Research, and enterprise AI search capabilities with Watson Discovery to understand and respond to common questions about COVID-19 in English, Telugu, and Hindi. 

Indian Council of Medical Research (ICMR), Ministry of Health and Family Welfare, has collaborated with us on IBM’s AI-enabled Watson virtual agent (called Watson Assistant) to bolster rapid response to India’s Frontline Testing Facilities on COVID-19. The bot responds to specific queries of front-line staff and data entry operators from various testing and diagnostic facilities across the country on COVID-19; this enables ICMR to utilize data and capabilities for rapid detection and treatment effectively.

Overall, I do see demand revival on the anvil.

SVG: How do you ensure your employees’ productivity and safety as they WFH during these testing times? Have you had to make additional investments to enable access to resources? Please give an overview of the technology implemented to allow this remote setup?

Sandip: Remote working has been a reality at IBM for a while now, providing personal flexibility to employees in times of need and enabling a mobile workforce to operate from anywhere in the world. We have a highly diverse, tech-savvy workforce who are used to working remotely. Therefore, we could swiftly and seamlessly move into the remote working environment at the pandemic’s onset, with 99 percent of our employees working from home. What has been different in the past few months is embracing this approach at scale and being agile and responsive in a dynamic environment.  

We believe the only way to navigate and embrace new ways of working is by supporting one another and ensuring overall well-being. This has evolved into a company-wide ‘The IBM Work from Home COVID Pledge’ with the simple goal of making work (and life) a little easier while we’re working from home. 

We encouraged employees to continue their focus on re-skilling and up-skilling in new technologies and aligning to market needs. In the initial phase of the lockdown, we saw India’s employees clocking 4.3 million learning hours, earning close to 1 lakh badges on key topics including Cloud and Cognitive practitioner, enterprise design thinking, and automation essentials on our Think Academy digital platform, IBM’s learning program. The learning hours witnessed a nearly 40% increase in comparison to the same period last year. 

We are also regularly communicating with the employees through dedicated, informative platforms regarding pandemic-related updates. Also, in the last couple of months, digital collaborative technologies have completely transformed the way we work. We have a gamut of digital collaborative tools like virtual video conferencing, virtual whiteboards, design thinking tools, file- sharing, chat, and voice tools that have empowered employees to be agile and work seamlessly by collaborating virtually. 

SVG: Our estimates at Greyhound Research tell us that demand for IT products and services will pick up by the OND quarter later this year. Assuming this lands correct, what are your expectations regarding demand coming back, and which of your offerings do you believe will be most relevant to customers during and after COVID times?

Sandip: We are witnessing trends where clients want to modernize apps, move more workloads to the Cloud, and automate IT tasks. As per our recent IBM IBV Hybrid Cloud study, Indian organizations plan to increase the share of spend on hybrid from the current 42 percent to 49 percent by 2023. The survey also reveals that by 2023, Indian organizations expect to be using an average of 10 Clouds; however, only 29 percent of businesses have holistic multi-cloud management strategies in place. So the opportunity here is significant. 

In the coming months, we expect more traction for the following technology solutions:

1/ To ensure support for a much heavier intranet load than the internet load, organizations need to urgently revisit their network design.

2/ With the shift to digital channels, Banking, telecom, and retail organizations will have to redesign their digital channels’ capacity and capability. 

3/ With an increase in customer support calls but a decrease in the workforce, organizations will adopt technologies like agent assist & chatbots.

4/ As remote working becomes the new normal, organizations must revisit security and compliance to reduce strain on security infrastructure.

5/ For operational agility and cost-efficiency, organizations will consider more adoption of Robotic Process Automation to automate processes.

6/ To operate remotely, organizations are likely to accelerate Cloud adoption and investment in automation for touchless operations.

7/ With higher dependence on technology and processes, organizations will invest in a much stronger business continuity planning.

8/ To fend off growing cybersecurity threats, organizations are looking at infusing AI into their workflows and securing their IT infrastructure.

Here are a few client examples where we have implemented some of the technology solutions as mentioned above:

HDFC ERGO has collaborated with us to co-create new AI-based solutions on IBM Cloud that will redefine the customer experience. Leveraging IBM Garage, HDFC ERGO and IBM are working together to develop and test new solutions to better address customer queries, ensure faster turnaround time, and draw deeper customer insights for a better omnichannel experience.

Bestseller, one of the largest fashion brands, uses IBM Watson AI capability to mine deeply into big data and predict the right merchandise for the consumer at the right time. This solution helps determine the right assortment plan for each store, predict the next best product to incorporate into its mix, and improve its supply chain’s efficiency. 

Wildcraft India Pvt. Ltd, India’s foremost company in the manufacturing and distributing head-to-toe products for trek-to-travel solutions, has selected IBM to implement a Customer Relationship Management (CRM) as-a-service-platform to drive customer advocacy and enhance the customer experience. The solution developed by IBM Services is powered by Artificial Intelligence (AI) & Machine Learning (ML) capabilities and analyses customer interactions with Wildcraft India Pvt. Ltd at multiple touchpoints. This 360-degree view of every shopper will help the company provide its customers with a personalized shopping experience across all its channels. 

SVG: Can you please share the changes you’ve made to the deal structuring, price discounts, financing leasing, and other you’ve had to make to deal with the new client demands during this time? Are there clients you’ve had to let go of simply because the asks were too aggressive or unreal?

Sandip: We work closely with our clients to restructure and extend the commercial terms wherever possible. We don’t see the requirement or the relevance to make any changes in the policies.  

To give you a few examples of how we worked with our clients to deploy cost reduction solutions without compromising the services, we gave concessions to provide the immediate short-term respite and introduced AI and Automation in processes and solutions to drive higher efficiency and return on investments.

Like other industries, the pandemic took a toll on the retail sector as well. One of the largest retail organizations, our long-time customer, was facing a crisis as they remained closed since March 2020. Their business revenue was close to zero, and cashflow had come to a grinding halt. Sustaining the IT services and managing the operations was a big challenge for them. We helped the client in cost reduction and changed our solution from on-premises to remote and automated many manual processes to achieve cost reductions. We looked at all the areas and proposed optimized operational services without compromising the quality and business-critical services.

We restructured specific contracts to reduce production volumes by moving them to the Cloud to address consumption variability. For a leading airline ecosystem partner & a large automobile manufacturer, we moved their data center to IBM Cloud to offer flexibility and handle the business volume fluctuations. 

We also saw many clients wanting to consolidate their services with one large partner like IBM, especially in the last six months. The primary objective here was to consolidate and reduce costs. A leading Insurance Company consolidated five contracts in managed services (infrastructure & application) with IBM Services. We integrated the best of our solutions, brought in a single governance layer, and migrated disaster recovery on Cloud to achieve efficiency. They not only achieved cost reduction but also got a seamless outsource service from IBM. Now, they can free up the IT team to focus on their core business. Another example I would like to cite, a leading pharma company migrated its core SAP instance out of on-prem to IBM Cloud to consolidate their applications globally to be managed out of India. 

IBM is also focusing on providing resiliency to its customers in this pandemic. We provided several Cloud offerings from AI, data, security, integration, remote learning, and others through our IBM Public Cloud on a try-and-buy model. Here’s a selection of offerings that we offered under this model:

1/ IBM Cloud offered no-cost options to help our customers maintain business continuity while migrating to remote work environments, including IBM Cloud Virtual Server configurations.

2/ IBM Aspera offered new clients free, 90-day access to its cloud service for high-speed file sharing and team collaboration. 

3/ IBM Security offered a number of solutions and extended, no-charge access to technologies to help clients alter their operations and security programs to protect remote employeesprotect themselves from cybersecurity criminals capitalizing on COVID-19 uncertainty, and address critical security needs. 

4/ IBM Video Streaming and IBM Enterprise Video Streaming solutions were offered at no cost, 90-day access for new customers to stream events to public audiences up to 20,000 viewer hours, or to stream to up to 20,000 authenticated users for one event per week.

5/ IBM Sterling solutions were offered at no cost, 90-day access to solutions was provided to help navigate the challenges stemming from supply chain disruptions, such as managing medical supplies, COVID-19 testing kits, and migrating retailers to a BOPIS (Buy Online Pick-up In-Store) strategy. 

6/ IBM Blueworks Live was offered at no cost, 90-day access was provided to help clients facilitate remote collaboration with stakeholders and distribute new or changing processes to their workforce.

7/ IBM Cloud Event Management was offered at no cost, 90-day access was provided to help teams cut through event noise to prioritize, diagnose, assign, and resolve incidents from a single service. 

8/ Remote learning resources, including free access to IBM Video Streaming for new K-12 education organizations, as alternatives are put in place for nearly a billion children who have seen their schools close due to COVID-19.

9/ IBM Garage is using its expertise and the IBM Garage methodology to remotely help clients address their emerging business requirements during this time. Access to all resources on our Enterprise Design Thinking site was temporarily free.

10/ IBM Cloud Object Storage offered to new and existing clients as a credit to be applied over a 90-day period to store new workloads in IBM Cloud Object Storage.

SVG: The Indian market is becoming rather competitive for Cloud Computing. While at one end, we have the Public Cloud providers fighting for business, at the other end, the hardware OEMs are offering extremely aggressive pricing that completely discredits the value proposition from Cloud. The clients are also beginning to grow wary about the long-term costing of Public Cloud.

While IBM has come a long way in how it packages various offerings across business units (incl Red Hat) for Hybrid Cloud, it’s not amply clear how the company is approaching and embracing the multi-cloud wave being adopted by organizations. Particularly how IBM products like security and Watson are being used as independent modules on other public clouds. Could you please talk more clearly about the more multi nature of the Hybrid Cloud, and how is IBM addressing that?

Sandip: We are going all-in on our open hybrid cloud platform and AI solutions to create value for our clients, our company, and our shareholders. The acquisition of Red Hat allowed us to build an open and secure hybrid cloud platform that cuts across all the places our clients do computing—on-premise, private, and publicly-operated public cloud environments. This was the first significant step to seize this opportunity and underpins everything that has followed.

Moving forward, IBM will sharpen its focus on its Open Hybrid Cloud and AI. NewCo will focus on managed infrastructure services. This will benefit clients, employees, and shareholders and place both IBM and NewCo on a growth trajectory.

NewCo will continue to be a strategic and preferred partner of IBM, and we will focus on seamlessly serving our client needs as we reset, recover, and revive through and beyond the pandemic. Considering that much of our business book includes long-term annuity contracts, it allows us to help our clients through a complex transformation at scale and deliver digital transformation with speed. Our long-standing client relationships, domain expertise, knowledge of the customer technology and business landscape gives us a strategic vantage point to serve our client needs end to end. 

While start-ups and independent software vendors (ISVs) can have a simpler IT environment, large enterprises are more complex, and the regulatory framework is entirely different. There will never be one size fit all model. With our strong presence in the enterprise data center – we understand the complexity, and hence there is no one solution to the client’s journey to Cloud.

There are five key offerings which are tailored to client requirements across industries: 

1/ OpenShift: The key to modernizing the workloads will be container orchestration. This is perhaps the most significant move that organizations will make. Once containerized, applications are capable of moving across platforms with ease. IBM Red Hat partnership and OpenShift are key to this modernization vision.

2/ Cloud Paks: IBM has containerized its complete middleware portfolio and organized it into Cloud Paks that can easily be consumed. Stacked on the OpenShift platform, these paks also provide investment protection and a migration path to existing clients’ sizeable base. We have launched 5 Cloud Paks – Application, Integration, Automation, Data, and Security.

3/ IBM Cloud and Cloud Satellite: While modernizing the Private Cloud with OpenShift and Cloud paks, IBM offers a robust and secure Public Cloud platform for the workloads that are most suited to Public Cloud. Within its Public Cloud platform, IBM has also announced Cloud Satellite – an in-prem footprint of the Public Cloud platform to give a single pane of control between public and private deployments (distributed Cloud).

4/ IBM Multicloud Management: Clients will use multiple Clouds at any given time and will like to reserve the right to be easily able to move workloads between different Cloud providers and yet have a single view. IBM’s Multi-Cloud Management solution provides this capability, and it also constantly monitors the economics across different Clouds. The solution offers recommendations based on the best economics for a particular workload.

5/ All this is stitched together through IBM Services – which offers the full gamut from Advise, Build, Migrate and Manage services based on current Cloud maturity of the client, both directly and through a network of established ecosystems partners.

This set is integrated across the enterprise clients in partnership with Red Hat to provide a tailored solution. We also have deep alliances with Cloud providers like – AWS and Azure – with related services capabilities.

With clients continuing to operate in a hybrid environment, we are aligning our software offerings accordingly. For example, in 2019, we announced Watson Anywhere, which allows organizations to use Watson AI technologies to run on any Cloud. This allows clients to bring AI wherever their data and apps reside, instead of the other way around.  

In the Public Cloud platform, IBM’s focus is to increasingly align to industry-specific platforms. For example, we have launched IBM Cloud for Financial Services, designed to build trust and enable a transparent Public Cloud ecosystem with specific features for security, compliance, and resiliency that financial institutions require. Financial institutions can now deploy on Public Cloud to enable innovation and deliver new, more personalized customer experiences while managing stringent industry regulations for sensitive data and complex workloads. We believe this is a significant differentiator for us in the Cloud space.

You know, only 20% of the easy workloads have moved over to the Cloud, but the majority of mission-critical workloads for enterprises still reside within the enterprises’ firewalls. So, the opportunity is huge for us at IBM.

In addition to the Telco sector, clients across industries including Honda, Best Seller, Maruti, National Stock Exchange, SBI, Berger Paints, AMUL, and others have embarked on their digital transformation journey with us.

SVG: One of the long-standing challenges with the IBM India business has been its SO deals. How are you restructuring these deals to add more to the bottom-line and list of logos? 

Sandip: The fundamental nature of SO deals has changed in the country over a period. Both the duration and value of long-term contracts have come down. Also, with Cloud, the infrastructure has intrinsically become Opex – which used to be a large value proposition for outsourcing.

Strategic Outsourcing contracts are now moving to outcome-based and self-funding constructs where the outcomes (either saving or additional profits) drive the projects’ funding.

They are more transformational, specifically in three areas – Big Data, Digital Transformation, and Infrastructure Modernization. We still see traction in outsourcing for cost take-out. IBM continues to focus on this strategic imperative and has aligned with the new reality. Not only have we acquired new logos, but we also extended our partnership with existing clients like AMUL, Vodafone, and Bharti Airtel.

SVG: More to the question from above, the largest deal chunk in SO deals has traditionally come from telcos, which have changed dramatically in the past years. The telcos are no more a key revenue driver that was once an almost USD 1 bn vertical for IBM India. In addition to the overall pressures that the industry is facing, we are also witnessing Telcos becoming a competition to IBM in many deals. Are you planning to change the working model with these Telcos and rather sell-with them to end clients?

Sandip: Despite the disruption in the industry, telcos remain amongst the biggest spenders in IT. We recently announced our collaboration with Vodafone to help them embrace open source at scale across the enterprise by implementing the Big Data Platform on the open-source Hadoop framework. As VIL’s strategic technology partner, we will be leading the end-to-end implementation and management of the Big Data Platform.

The consolidation in industry and ease of number portability requires telcos to remain competitive and improve services. Due to cost pressure, spending on tech is tied to business objectives, but overall spending remains significant.

There are two new areas that we are now focusing on with telcos. 

1/ Network Cloudification – This domain was traditionally dominated by Network Equipment Providers (NEP). Over the years, the NEP has virtualized functions, but they continue to run on an integrated stack. Along with Red Hat, IBM is exploring to disaggregate the stack. With Red Hat’s open platform, telcos can buy any standard x86HW, any networking, put the OpenSource Cloud stack, and run virtual network functions on top of it. This will significantly reduce the overall cost of the whole stack. IBM is now positioned to be a Network Cloud Integrator – capable of working across the NEP and provide a disaggregated solution. We have already established this in Bharti Airtel and Vodafone Idea. 5G and associated Virtual Radio Access Network (VRAN) and Open Radio Area Network (OpenRAN) technologies offer even more network cloudification opportunities. 

IBM announced that Vodafone Idea Limited (VIL) has delivered the first major production milestone for core network functions on its Open Universal Hybrid Cloud, powered by IBM and Red Hat. The platform now enables IT and network applications to run on a common cloud architecture – designed to deliver breakthrough ROI improvements through optimization of CapEx, OpEx, skills, and automation investments across both the Network and IT application domains. The Open Universal Hybrid Cloud is a hybrid cloud platform based on open technology and open standards from IBM and Red Hat.

Bharti Airtel (“Airtel”), one of India’s largest integrated telcos, has selected IBM and Red Hat to build its new telco network cloud, designed to make it more efficient, flexible, and future-ready to support core operations and enable new digital services. Under the agreement, Airtel will build its next-generation core network, analytical tools, and new consumer and enterprise services on top of this cloud platform based on open standards. Airtel intends to deliver a better customer experience with the new network cloud through enhanced network performance, improved availability, operations automation, and scaling the network to the edge.

2/ Joint Go-to-Market – Both IBM and telcos have a significant interest in the enterprise market. While for IBM, the enterprise is a core constituency, for telcos, it’s an emerging growth area. They bring data center capabilities, and bandwidth and IBM provide a gamut of B2B offerings. This strategic engagement will provide clients with the open, flexible technologies they need to integrate multiple Clouds.

The first such collaboration was signed with Vodafone in the UK and is now expanding to other telcos. With Verizon, we are collaborating on 5G and AI solutions to enable the future of Industry 4.0.

SVG: Another vertical that is a top contributor to IBM India’s business is BFSI. Similarly to Telco, are you planning to change the working model with some of these BFSI clients looking to reduce their cost for existing services contracts (and hence looking at cheaper providers) and looking to invest in FinTech companies on the side?

Sandip: BFSI remains the focus sector for IBM, and we see significant opportunities both for services and technology in this sector. The focus is shifting to the front office – Client Engagement, Data, and Analytics based acquisition and servicing, Digital channels, and overall security in this environment. 

FinTech companies are not IBM competitors. For us, it is increasingly a part of our partner ecosystem, and we are working actively with FinTech and our BFSI clients in several joint engagements.

We are witnessing a trend where platform business models significantly benefit customers and banks themselves. Using market platforms, banks can enable trusted exchanges and provide infrastructure and rules for marketplaces. They believe that platforms allow creating products and services that would be impossible to develop in a more traditional banking setting. They also believe that adopting a platform business strategy means extending beyond a single platform. 

This can perhaps be best illustrated by what the Bank of Baroda (BOB), India’s second-largest public sector bank, is doing with farmers. While most of India’s farmers may have at least a basic relationship with a bank, BOB is working to transform what the future relationship between bank and farmer will be—a much deeper, interactive relationship. The platform helps farmers gauge crop conditions, anticipate weather patterns, determine soil health and the presence of agricultural pests, then receive special crop-related consultation. It allows them to use technology, such as advanced analytics and image sensing, to grade crops.

It is the first of its kind holistic agricultural support app for farmers launched by a public sector bank in India, with 2,286 dedicated agricultural officers to provide assistance. The ecosystem-driven platform also empowers farmers with the financing and fiscal advice. Baroda Kisan’s ultimate goal is to support India’s national mission of doubling farmers’ income by 2022.

In addition to our engagement with SBI on YONO—”you only need one”—customer-centric platform environment, IBM was also instrumental in designing and implementing the Datawarehouse capabilities at SBI, the largest such installation in the Banking sector across the world. As the new normal for the financial sector revolves around radically lower cost structures, operational resiliency, and reinvented customer experiences, SBI realized the need to power extreme digitization to future proof their banking and enhance the customer experience.

As a key step in that direction, the bank collaborates with IBM to augment its existing solution to a Next-gen Datawarehouse & Data Lake solution. Also, Bank is using Power Server, IBM Storage Systems, Analytics Software (IIAS, CDC, DB2, Optim, etc.) and Hybrid Cloud solutions (WAS, IIB, DataPower, API Banking, Sterling File Management, Cloud Pak for Data & Integration) to run the largest internet banking platform/service and other critical operations.

SVG: Speaking of SO deals, I know that a lot of effort has been put to offer outcome-based deals to these customers and ensure a win-win in the long-term. This is a significant risk for the company since achieving technology outcomes is manageable and controllable by IBM. It’s the business outcomes that involve dependence on third-parties and hence means a much higher risk. How do you keep a balance between both?

Sandip: We are keen to engage with clients on outcome-based models. Outcome-based contracts will be more profitable when they succeed, and rightly, they will cause losses if they fail. Understanding business and domain knowledge are critical to addressing client needs, and players with deep industry expertise and rich experience will thrive and dominate the industry. We are currently engaged with some of our large clients working on specific projects on outcome-based models.

The key to success is continuously building on achievements, rectifying failures, optimizing, and succeeding. Agile methodologies and garage frameworks are essential methods that ensure that failures come in small doses that keep getting corrected rather than a one-time report card of failure or success. This also ensures timely delivery in the dynamic decision-making environment. The model will evolve, but this will be the future of outsourcing. 

These are still early days to call out a market trend and many clients back away from outcome-based models as they are not willing to share the fruits of outcome they can envision. The jury is still out on this.

SVG: The market is increasingly being dominated by new-age industries and decision-makers that are not home turf for IBM. This is true, especially in India, where there’s an abundance of start-ups and enough VC money being fuelled into unicorns. But these are the kind of companies and folks that neither knows much about IBM nor are comfortable with the traditional technology vendors. These clients are far more engineering-led and like vendors who are similarly organized and not led by the typical sales and operations managers.

While IBM has shown great appreciation for open source and investing aggressively, it’s a little ironic that the company does not enjoy a high recall with the audience using open source most, i.e., start-ups. To build on that, while it’s a given that IBM is the gold standard in supporting complex, enterprise-grade workloads across traditional organizations, I am keen to understand how IBM is approaching the new-age incumbents that also have similarly complex, enterprise-grade workloads and a lot less compliant compared to their traditional counterparts.

How do you plan to make bridges with these folks since this has been spoken about for the longest? Not much change has been seen in how IBM has changed internally to address this.

Sandip: We have realigned our strategy. Today, we consider these niche new-age engineering companies as part of our partner ecosystem. The majority of our clients are large enterprises that focus on their core competencies and leverage external expertise for other functions. We continue to explore ways to work jointly with these new-age companies to offer innovative and robust solutions to our enterprise clients. They bring considerable engineering skills to the table in a very agile manner. 

We not only focus on start-ups but the entire ecosystem, including developers and ISVs. India is home to the largest developer population in the world. We work very closely with the developer community to energize them with targeted programs. IBM has seen more than a 300% increase in active developers on our platform in less than two years. As of Dec 2019, ISA has the highest developer base in IBM. We plan to increase this by 25% in 2020.

Apart from this, we are also building robust local solutions through our Cognitive Systems AI community and have already signed with several start-ups and 14 independent software vendors (ISVs). We launched this initiative in April to create a portfolio of real-world solutions by partnering with start-ups and ISVs to provide innovative offerings for enterprise clients. For example: 

1/ Arya.ai, an autonomous AI operating platform built for financial services, has created a solution on the IBM platform that has reduced the inward cheque clearing time from one cheque per minute to 18 cheques per second. Currently, the company in talks with public and private sector banks to deploy the solution.

2/ AptusDataLabs has created an intelligent supply chain management solution, and the company is now piloting another augmented analytics solution through the community. 

3/ Artivatic.ai, which provides solutions for insurance companies, is also using IBM platforms to build its solutions. 

SVG: Speaking of AI, traditionally IBM Watson didn’t land very well in India since it wasn’t localized enough. Can you please share specifics on IBM’s efforts to localize Watson and its broader AI strategy?

Sandip: AI is at a critical inflection point in India, especially in the context of the exponential digital acceleration through the pandemic.

India is one of the most data-rich economies globally, hence the adoption of AI is inevitable. The question is at what scale, speed, and maturity curve will it play out? We at IBM certainly see this as the decade of AI in India.

To give you a sense of our marketplace, we have been seeing an upward trajectory for AI adoption for several quarters. The data & AI business unit, which includes our Watson AI offerings, witnessed a triple-digit growth in India/South Asia region last year. Sectors like retail, BFSI, healthcare, and e-commerce have been deploying AI to increase efficiency and productivity, enhance customer service, and build a more robust security cover. COVID-19 is a litmus test for AI in which it has been conclusively proving its effectiveness. The pace of digital acceleration that we have seen in the last 8-10 months would have otherwise taken years to happen.

IBM is entirely focused on providing AI to businesses to transform and better serve their customers and employees. However, the critical point that we have been stressing on is that AI is only as good as the underlying data, making the entire governance lifecycle all the more vital for India’s roadmap of AI maturity. We are making this happen through our AI Ladder approach, which provides people a pragmatic view of how best to adopt AI across a business. It looks at the adoption of AI in collecting, organizing, analyzing data, and then infusing AI in business.

For AI to flourish, organizations must adopt and embrace a prerequisite set of conditions or building blocks – there is no AI without IA (information architecture).

The next tenet is our platform approach – IBM is the only provider with a data platform that enables organizations to run AI wherever their data resides, across public, private, and hybrid multi-cloud. The tech behind what we call Watson Anywhere is a unique combination of IBM’s Cloud Pak for Data and Red Hat OpenShift. No other vendor offers the technical capabilities provided by this orchestration of microservices, containers, governance, and AI management.

Our AI for IT approach has been aimed at leveraging AI to help enterprises manage growing IT complexities and transform how they develop, deploy, and operate their IT. IBM Watson AIOps leverages AI to reliably operate enterprise applications and automate the detection, diagnosis, and response to IT anomalies in real-time. CIOs can deploy this powerful tool to help them adopt and adapt to hybrid cloud infrastructures and make their digital transformations more successful. We very recently announced a new partnership with ServiceNow, bringing IBM Watson AIOps and ServiceNow’s IT Service Management (ITSM) and IT Operations Management (ITOM) offerings together in an integrated solution. Supported by IBM Services’ expertise in enterprise transformation, we apply leading AI capabilities from IBM Watson into the workflows and data captured in ServiceNow’s Now Platform.

Let me give you a few examples to explain better how our clients in India have innovated with AI.

Bestseller India used IBM Garage methods to develop Fabric.ai, India’s first AI-powered platform for the fashion industry. Fabric.ai derives insights from data to forecast demand more accurately, sell more apparel at higher margins, and reduce unsold inventory. By infusing intelligence across its products and processes, the company built a smarter, more resilient business.

With Karnataka being a key producer of tomatoes and maize, IBM developed an AI-enabled advanced price forecasting system for the Karnataka Agricultural Prices Commission (KAPC). It is a dashboard that predicts the market price trends for at least a fortnight and tomatoes’ production pattern. The dashboard, leveraging IBM’s Watson Decision Platform for Agriculture and big data, AI and ML, uses satellite imagery and weather data to assess the acreage and monitor crop health on a real-time basis. It can detect pest and disease infestations, estimate the tomato output and yield, and forecast prices. Previously, the output estimates were based mainly on acreage data. Other key inputs, such as the prices in neighboring states’ major markets, are also factored into the price forecast. The price forecasting mechanism developed for Karnataka was the first of its kind in the country.

Parle is working with IBM to create an “intelligent supply chain” by leveraging IBM Watson AI solution to predict demand, reduce time-to-market, and right-size its inventory across the supply chain.

Wildcraft provides its customers with a personalized shopping experience across all its channels. It drives customer advocacy with a CRM-as-a-service platform powered by AI & machine learning capabilities. It gives a 360-degree view of every shopper, which helps the company provide its customers with a personalized shopping experience across all its channels. It leverages WhatsApp and a virtual chatbot available in English and eight Indian regional languages – Hindi, Marathi, Bengali, Kannada, Oriya, Telugu, Tamil, and Malayalam.

IFFCO Tokio General Insurance collaborated with IBM to automate the claim assessment process using an AI-based Claim Damage Assessment Tool (CDAT). CDAT leverages Cognitive Image Analytics to assess the type and extent of damage incurred to the vehicle to facilitate the claims process. Within a few minutes, the assessment and the cost are given to the customer, accepting which the customer gets paid in 15 minutes. The solution helped IFFCO Tokio reduce the claim response time by 30% and achieve cost optimization.

On the localization of AI for India, IBM Research has been focused on creating Natural Language Processing (NLP) capabilities for our enterprise clients, empowering them to deploy and scale sophisticated AI systems. We are working on advancing NLP capabilities that address the stated challenges, including – Sentiment Analysis, Question Answering, Conversation, and Dialog understanding. All these capabilities are further built into Watson offerings and made available for all our customers worldwide. We are also working in Indian languages, but it involves a wide range of scientific challenges and practical opportunities due to variations in script, dialects, accents, embedded culture, and several other factors. Different languages have their nuances, and merely translating does not capture its deep semantics, hence understanding a language natively is important.

In 2018, IIT Bombay joined IBM Research’s AI Horizon Network (AIHN) as part of which we are working to enable Watson to understand Indian languages beyond just translation. Using a combination of AI-deep learning, shallow semantic understanding models, we have enabled Watson to understand the Hindi language natively. Watson is now equipped to understand Hindi utterances in Devanagari, sentence structure, grammar, and other nuances. We are also working on most Indian languages like Bengali, Tamil, Marathi, apart from several languages across the globe. This will enable people in every corner of the country to access the latest technological advances and benefit from it. Similarly, the collaboration with IIT Delhi as part of AIHN is currently working on new AI techniques known as Neurosymbolic AI/ Reasoning AI, which could significantly increase AI’s value for businesses and society at large by answering complex and common-sense questions intelligently.

There are several examples of how Watson is enabling rapid up-skilling and productivity. For example, given the wide range of testing facilities, geographical and linguistic diversity across our country, there were many variations in the documents, procedures, and forms associated with gathering patient and auxiliary data. Through conversational disambiguation and clarifications, Watson rapidly discerned just the right information from users and enabled the efficient gathering of patient data for the Indian Council for Medical Research staff. Another ongoing challenge for users is the rapidly changing information about health guidelines related to the virus and ICMR’s updates. Watson was able to constantly ingest the latest information and ensure that the users are presented with reliable, trusted information, which is very important for dealing with this pandemic.

Finally, we firmly believe that AI can be a driver of India’s economic & business growth and are therefore collaborating with an entire ecosystem to shape AI’s future in India. To champion the adoption of AI at scale in a conducive policy environment, we are closely working with the government. We are also engaged with CII. As the Chairman of The CII AI Forum, I will work closely with the members to look at initiatives that can spur local innovation and build a strong AI ecosystem in India by bringing in awareness at scale and enhancing capabilities by skilling/reskilling workforce for the future.

To create a portfolio of real-world solutions aimed at cutting costs and improving efficiencies for enterprise clients, we recently launched the IBM Cognitive Systems AI Community, which helps startups with hardware and technology requirements and provides them with market access. 25+ startups have already signed up at the outset.

Further, to boost AI skills in the nation and create a robust foundation in AI right from the high school level, we collaborated with the Central Board of Secondary Education to integrate AI curriculum for Grades XI & XII in 200 Schools across 13 states in the country. To teach the necessary skills & knowledge in emerging technologies – including AI – in the Indian youth, we collaborated with NSDC to offer ‘Open P-TECH’, a free digital education platform, focused on emerging technologies and professional development skills.

SVG: Finally, let’s talk about your journey as the leader of IBM ISA. When you assumed the office, the sales motion wasn’t as evolved on Hybrid Cloud and was geared towards mid-market sales of the STG business and related managed services deals. How have you changed or evolved this motion, and more importantly, what different are you planning to do in 2021 to add revenue and growth under the new company setup?

Sandip: I have focussed on growing business momentum from when I started, including the mid-market segment, systems, and storage. While COVID-19 has punctuated most of my time in this role, I have run with a 5 point focus:

1/ Hybrid Cloud. With a strong focus on the ecosystem, our strategy on Open Hybrid Cloud Platform, Red Hat, and OpenShift underpinned by security and digital trust is deeply resonating with the market, and we are all-in on Open Hybrid Cloud Platform.

2/ Data and AI at scale. While we have seen green-shoots in the AI space with examples, I have shared with you, including Karnataka Agricultural Prices Commission (KAPC), HDFC ERGO, AP govt, and ICMR. The key is to harness the power of data at scale to drive insights and business across sectors – from healthcare to agriculture, fashion to contact centers, this space is well poised to unlock value and growth for our clients and naturally for us. Another example of this is our recent announcement with Vodafone Idea about implementing and managing their open-source Big Data platform that supports the integrated enterprise and positions them for the future.

3/ Systems, storage solutions continue to have strong resonance in the market and on a steady growth trajectory.

4/ IBM One Services focus. With industry-specific value propositions, leveraging the full power of the IBM suite of offerings has helped us with market gains on an ongoing basis.

5/ Global Missions like our research and software labs in India are an extremely relevant resource with data elite teams, researchers, software engineers, innovators, and solutions – that Make in India, for India, and the World. We are leveraging these capabilities and talent deliberately and consistently in the work we are doing in the domestic market.

Going into 2021, I see a continued focus on One IBM approach with a more robust IBM solutions footprint across the client landscape. Combined with Red Hat and OpenShift, we will certainly continue to be a formidable force-only stronger in the times ahead.

SVG: Sandip, thanks again for your time. This has truly been a wonderful conversation.


<strong>Analyst: Sanchit Vir Gogia</strong>
Analyst: Sanchit Vir Gogia

Sanchit is the Chief Analyst, Founder & CEO of Greyhound Research, a Global, Award-Winning, Digital & Technology Research & Advisory firm.


Disclaimer. This #CounterpunchWithSVG executive dialogue is brought to you by Greyhound Research. Please note, Greyhound Research holds complete editorial control of this content, and the featured executive (and their employer) has had no influence on the content quality and production process. All content shared herein is the copyright of Greyhound Research and you may share this using the options made available. Please don’t download this content (complete or parts) and distribute it over the web and emails. Email us at connect@greyhoundg.com if you need clarifications.

Copyright © 2020 Greyhound Research. All rights reserved. You may share this research note using the options made available. Please don’t copy this research note (complete or parts) and distribute over the web and emails. Connect with us if you need clarifications.

Legal Note. The contents in this portal do not necessarily reflect the opinions, ideas, thoughts, points of view, and any other potential attribution to any contributor’s, commentator’s, or author’s past or future employers. No NDA’s have been broken. Email our Client Centricity Team to learn more on our NDA policy. Sources may come from both publicly available information and private individual conversations. In case of publicly available information, attributions have been added.

Leave a Reply