How can the Indian IT industry reduce production costs by 80?

MUMBAI, INDIA: It seems that the $146 billion Indian IT industry has finally got an answer to the query.

As the production costs keep mounting, a large number of the IT services magnets have started penning an on-shoring strategty to save production costs. And they are being ably supported by automation.

A CIO of a large European bank that outsources projects to one of India's top three software firms told Economic Times, "When you have the potential to automate certain projects, what difference does it make whether that project is onshore or offshore? It makes that debate irrelevant."

The ET report said that automated technology has the potential to reduce production cost by 80 percent in commoditized service lines.

Peter Bendor-Samuel, CEO,  Everest Group, an outsourcing advisory firm, in his blog post endorses, "After more than a decade of achieving value through the offshore labour arbitrage model, one would think that mature organisations that have built GICs or captives, or organisations with extensive use of third-party outsourcing providers, would be at peace with the model. We expected them to move to a model of arbitrage plus automation. But ... companies are expressing their desire to use robotics automation to repatriate their work."

It must be noted that robotics automation has the capability to disrupt the traditional 'pyramid model' of Indian IT industry, and the technology is being adopted by none other than the top brass in business including TCS, Cognizant and Infosys.