IBM expanding in tier-2, tier-3 locations in the country: IBM India MD

Amidst global economic uncertainty, tech giant IBM isn’t seeing any sign of a slowdown in India, said Sandip Patel, managing director, IBM India. In an interview with Peerzada Abrar, Patel said the firm is expanding its footprint in India by setting up facilities such as software labs and delivery centres in tier-2 and tier-3 locations to tap into the talent pool and build products and services. Patel also talks about the role IBM aims to play in India's goal of achieving a $1 trillion digital economy in a few years. He also talks about the impact that AI would have on the future of work and businesses. Edited excerpts:

How do you view the global macroeconomic uncertainty and its impact on tech companies?

What started following Covid is companies are trying to become more resilient and trying to think about how to prepare for what might come next. The whole push around digital transformation and automation has been a focus. When I talk to clients both in India as well as around the world, there is a focus on how you get more digitally transformed. Not just to be more competitive, which is obviously needed, but to actually look at new ways of creating revenue streams and competing with competitors that are increasingly becoming more digital. It isn't about how good a digital bank is in the banking space. It's about how good they are digitally in a world where you have a digital consumer that's going to not (just) compare them against other banks but (also) against other digital properties that they are using and working on. 

We are seeing tech companies laying off thousands of employees. Where does India stand in this situation? 
 

We haven't seen any signs of slowing down in India. When you look at reports from Nasscom (National Association of Software and Service Companies) and our own GDP (gross domestic product) projections through a variety of different analysts, India has not necessarily seen that level of slowdown. If you put focus on digital transformation both across the government as well as enterprises and the pace at which that transformation is happening, I think the prospects of India are extremely positive and bullish. What started with Aadhar and UPI (unified payments interface) and all the rest, that is continuing. Look at the budget that the government has put out, (like) infrastructure investments. A lot of that transformation of infrastructure is going to require significant technology adoption.

Are there going to be any layoffs at IBM in India?  

There is no blanket hiring 'pause' in place. IBM has been deliberate and very thoughtful in terms of how we hire with a focus on revenue-generating roles and we continue to be very selective when filling jobs that don't (directly) touch our clients or technology. Just go on to ibm.com and see how many open positions we have there. We are actively hiring for thousands of positions right now. In India, we haven't stopped hiring. We have had a whole focus on Tier 2 and 3 cities where we have just opened several software labs. There we are continuing to drive software developments and research labs and global delivery centres.  We are continuing to open those (facilities) in Tier 2 and 3 cities. All of that hiring continues to add to the employee population that we have in India.

What are the reasons for IBM to tap Tier 2 and 3 cities?
 

The intent was not just to go and find new locations. But there are pockets of talent and capability that are growing and available in some of these tier 2 and tier 3 cities or emerging areas. We have opened software labs recently (in these locations). We don't open them (just at any place) because a lot of our global development for software happens there. We just launched software labs in Ahmedabad, Gandhinagar and Kochi. In addition, we opened our delivery centres in Bhubaneswar and Mysuru. We are continuing to look at such emerging clusters or areas. We look at them from three perspectives which include the availability of talent, and infrastructure and we look at how we can actually leverage the emerging ecosystem in that area. For instance, we picked Kochi and Ahmedabad, for our software labs as some of our GSI (global system integrator) partners had (a presence) there or had plans to do that. We are continuing to look at expansion across all of our domains. IBM India is the microcosm of the IBM corporation. We have our software labs, hardware systems labs and research labs here. And then we have our delivery centres in addition to a fairly vibrant domestic business that we run. All of these will continue to grow in India. We will continue to look at options both in these emerging cities and also in our base operations. 

What role do you see IBM playing in India’s goal to achieve a $1 trillion digital economy in a few years? 
 

IBM has been a part of the technical fabric within the enterprise side of India for many years. Today I think 9 out of the 10 public sector banks are all running on IBM systems including a fair bit of IBM software as well. Two of the major telcos are operating on IBM systems. I think two-thirds of the milk production and supply is happening across IBM systems. A lot of the retail businesses are powered by AI (artificial intelligence) models and those are driven by IBM. We have been part of India’s technology enterprise for many years. In terms of the growth of infrastructure, if you look at investments in the railways, it will require a fair bit of asset management, monitoring, and logistics. All of that will have applications of technology. I visualize IBM continuing to be inside everything that matters and which powers the digitization of India.

Generative AI and ChatGPT are creating a huge buzz. What are the innovations that you are building in this space? 
 

While we can weave a poem, paint a picture and generate a report or code,  the real challenge that we have to think about and this is something which our honourable Finance Minister  (Nirmala Sitharaman) has said, is ‘how do we make AI work for India’? The real challenge is how can businesses leverage this technology to build applications that can boost employee productivity or improve user experience. The bigger question is how can a corporation adopt this technology at scale for its business in a way that has trust, transparency and confidence in its outcome. We have announced IBM WatsonX, a new AI and data platform that will enable enterprises to scale and accelerate the impact of advanced AI but with trusted data. One of the key differentiators that we are trying to build for ourselves is giving the organizations the key capabilities that it needs to scale AI. This includes natural language processing, trust, and automation. But more importantly, it is the ability to run anywhere across any hybrid multi-clouded environment. Over the years we have brought data to AI and AI models to basically look at delivering some results. What we are doing with WatsonX, which is essentially using foundational models that are trained with real-life data, we are creating the ability to bring AI to the edge where your data resides.

IBM recently said that its new A.I. tools will be able to do ’30 – 50 per cent’ of ‘repetitive’ office work. What impact would such technologies have on jobs?

This is not anything different from what any form of technology and automation has done over the years. The need to continue to make operations and processes more efficient has been essentially the core of what we do with technology. This is no different than that. It allows better decision-making and enables people to do more enhanced roles. There are certain capabilities that will get replaced by AI. These are non-productive roles that will get automated and therefore are being done now with a lot less human intervention and with a lot fewer errors. For example in the HR process, if a (person) required an employer certification to apply for a loan, it used to take days. Someone had to review and check it manually. That entire process by using automation and AI is reduced to less than half an hour and with a lot fewer errors.  However, we also believe that businesses are a little bit overwhelmed by how you use this technology. If it's developed the wrong way, AI can be frivolous and dangerous. Businesses will continue to need AI that is accurate, like it has results you can trust and it needs to be scalable and adaptable. 

Any collaboration with the government in the AI space?

We have been working closely with one of the agencies in the Indian government to promote and advance AI work. Here our research labs (in collaboration) with our consulting team have been working with one of the departments in the government of India which is in policy formation, revenue forecasting and fraud detection etc. We worked with them to build 43 AI models and a data platform that was developed for them. It processes data from billions of source materials where data comes from the length and breadth of the country. Over the last 2 years that we have been doing this for them, we have seen a 50 times ROI (return on investment) for the client. Over $5 billion (worth) of fraud has been detected. Over 2000 fraud cases have been filed. That is the magnitude and power of what these foundational AI models can actually help drive at scale at a country level.