8
Plot No 7 to 10, Sector 126, Noida, Uttar Pradesh 201301, IndiaPhone: 91-120-4990111, E-mail: [email protected]: www.nasscom.in
First Print: November 2016
Published by: NASSCOM
Designed & Produced by:Purplemango IndiaPhone: +91 9886471512
Disclaimer:The information contained herein has been obtained from sources believed to be reliable. NASSCOM disclaims all warranties as to the accuracy, completeness or adequacy of such information. NASSCOM shall have no liability for errors, omissions or inadequacies in the information contained herein, or for interpretations thereof.
The material in this publication is copyrighted. No part of this report can be reproduced either on paper or electronic media without permission in writing from NASSCOM. Request for permission to reproduce any part of the report may be sent to NASSCOM.
Usage of Information: Forwarding/copy/using in publications without approval from NASSCOM will be considered as infringement of intellectual property rights.
Copyright © 2016
FOREWORD History is replete with examples of the impact of various industrial revolutions on both business and economy. While the first three industrial revolutions were the result of mechanisation, mass production and automation respectively, the ongoing fourth industrial revolution is being shaped by a range of new technologies that are blurring the lines between the physical and the cyber world and giving rise to cyber-physical systems. This speed of change is unprecedented and exponential, impacting individuals, corporations and every industry worldwide. Among these technologies that include IoT, 3D Printing, robotics, analytics, bio- & nano-technology, etc., is AI-Artificial intelligence.
Artificial intelligence (AI), as the name suggests, attempts to bring human intelligence to machines or robots that can then think and interact like humans. While great strides have been made in this direction as certain examples show – Google’s DeepMind and self-driving cars, Baidu’s DuLight, Apple’s Siri, Amazon’s Alexa, Microsoft’s Cortana, etc., - the final frontiers are yet being explored.
India’s IT-BPM industry has also turned its lens on AI; recent examples include Wipro’s Holmes, TCS’ ignio®, Infosys’ Mana™ and HCL’s DryICE®. AI is expected to generate USD 100-120 billion by 2025 in productivity-led gains for global IT-BPM service providers particularly in the areas of consulting, engineering services, application development, management & testing, BPM and infrastructure services. AI could also open up USD 400+ billion of net new addressable market over next 7-10 years.
Keeping in mind the impact that AI is most likely to have in our everyday lives and in business, and the potential business opportunity it has to offer, NASSCOM in partnership with The Boston Consulting Group, has worked on a report “AI, Beyond the Myth and the Hype” that aims to present the scope of this technology, its impact on various industries, the market opportunity it presents and the roadmap to achieve the target.
We hope you find this report useful. Please do share your feedback at [email protected].
Vikash Jain Partner and Director,
BCG India
R Chandrashekhar, President, NASSCOM
ACKNOWLEDGEMENTS
The focus of this study is to de-mystify AI, assess its impact across industries and crystallize what Indian IT-BPM must do to seize the opportunity.
BCG conducted a 3 month study to understand the impact of AI across industries, particularly the Indian IT industry, and the expectations going forward.
We would like to thank various stakeholders for their valuable contribution without which this report would not have been possible.
Our sincere thanks to industry leaders who provided their valuable time for sharing their perspective on AI and its implications. We would like to extend our sincere appreciation especially to the following firms: Altimetrik, American Express, arya.ai, BRIDGEi2i Analytics Solutions, Capegemini, Cyient Limited, Happiest Minds, HCL Technologies Ltd, Infosys, Inteliment Technologies, Mindtree, Niki.ai, Philips, Siemens, TCS, and Wipro.
NASSCOM’s Big Data Summit also helped shape the report through the counsel and guidance provided by the panel members and participants. We would like to convey our thanks to them.
We would like to thank Shantanu Upadhyay who led the joint BCG-NASSCOM team. A special acknowledgement to the working team including Virendra Shekhawat from BCG and Mohanakrishnan, Achyuta Ghosh and Diksha Nerurkar from NASSCOM for their efforts and contribution in pulling this report together.
The report “AI, Beyond the Myth and the Hype” is a joint effort by The Boston Consulting Group (BCG) and NASSCOM.
EXECUTIVE SUMMARY
After decades of speculation, sci-fi fantasies and disappointments, Artificial Intelligence (AI) has started to have an impact on our everyday lives in subtle and ubiquitous ways. Google Maps use AI to plot the quickest route and estimate traffic delays. Virtual assistants such as Apple Siri, Google Now and Microsoft Cortana leverage AI to transform your words into bits of sound, compare those sounds to others, and then understand your questions. Some of the short news snippets that we read on Fox, AP etc. are being written by AI programs. AI is also behind the fraud alert that we get when we make an abnormal purchase on our credit card.
Amidst all the hype associated with AI, embracing a clear definition of AI is key to unleash its real potential. If one defines it broadly, it is easy to bundle-in any and every automation under AI. This lowers the bar for AI and dilutes its “real” potential. On the other hand, if one defines it too narrowly, it may set up practitioners for potential failures to achieve bold target of developing human-like “general intelligence” and can slow down AI’s targeted commercial applications in “narrow” areas such as automated customer service, legal discovery, fraud detection etc. in the near to mid-term.
Task-driven “Narrow AI” is already making its presence felt across industries to varying impact. AI is getting embedded in the financial services industry, with applications ranging from customer support to wealth management to fraud detection. Robotic manufacturing in the industrial sector is becoming more autonomous, flexible, and cooperative with the application of AI. AI is transforming retail through enhanced personalization. It is also helping reimagine automotive with self-driving cars and healthcare with new ways in which preventive care and diagnosis can be done.
AI will also transform the IT-BPM sector as we know it. Our estimates suggest AI-led automation and augmentation across service-lines will deliver USD 100-120 billion in net productivity-led gains for IT-BPM service providers by 2025. This translates into 5-7 per cent points EBITDA impact for IT-BPM service providers. AI will completely redefine what is considered core, mid- or back-office and help IT-BPM players penetrate “heart of the business” processes within verticals through BPaaS and domain-led solutions. This will open up USD 400 billion of net new revenue opportunity over the next 7-10 years.
AI, Beyond the Myth & the Hype 6
AI represents a potential watershed moment for Indian IT-BPM players and if played right, could position them on an exponential growth curve. They have started to invest in proprietary platforms and capabilities with Wipro’s Holmes, TCS’ ignio®, Infosys’ Mana™ and HCL’s DryICE®. But there is scope to set a bolder course and aggressively look for ways to reinvent themselves.
There are 5 key success mantras that the Indian IT-BPM players must internalize to crack the AI code:
1. Pick battles carefully
Identify use cases within specific verticals where AI can deliver order-of-magnitude (at least 5-10X) impact. Take selective bets in areas of strength and invest in early prototypes.
2. Take the customers along
Engage senior leadership in customer organizations and educate them on these technologies. Invest in pilots -- keep it small and modular so that it is easy to expand and scale as clients’ confidence and appetite grows.
3. Co-invest and collaborate
Avoid getting trapped into developing everything in-house. Tap into the capabilities and assets of ecosystem partners and startups to creatively shape and strengthen offer portfolio.
4. Get the right talent
Import talent from the outside (startups, academia etc.) while investing in setting-up infrastructure to deliver large-scale re-skilling of the existing bench in areas such as machine learning, data sciences, NLP, image recognition, etc.
5. Have a plan
Lay out a concrete and coherent AI agenda that includes a bold intent, well-articulated strategy and a stage-gated roadmap. Ensure that the senior leadership (particularly the CEO) commits time and personal capital to drive AI agenda.
AI, Beyond the Myth & the Hype 7
CONTENTSCOMING OF AGE 9
AI Defined 9
Cognitive Technologies that Enable AI 12
THE FUTURE IS ALREADY HERE 15
AI LED EVOLUTION OF INDUSTRIES 18
Healthcare 20
Automotive 21
Retail 23
Banking and Financial Services 24
Industrials 26
GOING FORWARD 28
IMPLICATIONS FOR IT-BPM SERVICES 32
WHAT SHOULD INDIAN IT-BPM PLAYERS DO TO PREPARE FOR THE AI-DRIVEN FUTURE? 39
GLOSSARY 45
AI, Beyond the Myth & the Hype 8
