In Bangalore, seeing 1.5 million workers buzzing about from day to night on any given week is the norm. To see reports of deserted IT sector's campuses then, is not just surreal, it's scary. And the world didn't even have to conjure up visions of a zombie apocalypse to see this scene come to life. Instead, an invisible enemy has struck -- the coronavirus pandemic -- putting existential pressure on Indian IT's business model.
India's IT sector, valued at around $180 billion, has always gained its success from the intersection of two basic realities: the droves of Indian engineers produced by the flood of engineering colleges and the relatively low salaries they are paid. Indian engineers earn one-fourth of their counterparts in China and around an eighth of their American brethren. In the banking sector alone, for example, Barclays, Deutsche Bank, and JP Morgan collectively employ over 60,000 people from India to service their institutions' global technology needs due to these two realities.
With India's IT sectors being utilised around the world, it would be easy to assume that companies would simply shift these coders and developers to a work from home model during the COVID-19 pandemic. But it's turned out to be much more complicated than that, however. One of the main reasons for that is Indian IT also performs what is called mission critical functions that allow seldom-asleep businesses such as banks, healthcare companies, and stock exchanges to function round-the-clock. Unfortunately, the extremely sensitive nature of that data often comes with regulatory diktats in addition to security and privacy issues that make working from home nearly impossible.
This is the fundamental dilemma facing Indian IT and its clients. It's not just about serving its client base amid a time of great tumult -- it's also about ensuring that its business model remains intact. The Economic Times reported that basic functionalities, such as business and accounting processes, application development, and what are referred to as L1 functions, have grudgingly been allowed into the work from home category. However, for the highest levels of L2 and L3 support for IT systems like data centres, clients are baulking.
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Rajesh Gopinath, CEO of Tata Consultancy Services (TCS), India's largest IT services outfit, says that his company has been able to service the 1,000 odd client base via an 85% working from home employee force both in India and overseas, thanks to its Secure Borderless Workspace program. "All these organisations have trusted TCS to manage their technology and continue to place their confidence on us to help them tide over this situation," Gopinathan said to The Economic Times.
Apparently, Accenture is not so lucky for some reason. The research firm, Everest Group, observes that Accenture has stated that only 60% of its work can be done remotely. After all, shifting nearly two-thirds of a 4.36 million workforce to a work from home model is not for the fainthearted.
"Moving millions of desktops to employees' homes, configuring software to allow for slower bandwidth and ensuring cybersecurity -- it's a mind-boggling physical and logistical exercise that our companies are in the midst of right now," Keshav Murugesh, chairman of Nasscom and CEO of WNS Global Services, told The Economic Times.
Worried clients have also asked that companies move office PCs to a worker's house rather than have them operate from their laptop.
But for mission-critical functions, a solitary employee is often asked to man the networks, which is arguably the most sensitive part of the firm's infrastructure. UBS Group AG, Deutsche Bank AG, and other global giants are currently working with industry trade group Nasscom to ensure that Indian states classify such work as essential services so staff can continue to provide these services from the office, if required. Of course, this is far from easy now as India has imposed a complete lockdown that prevents all travel, further complicating IT companies' abilities to keep their clients' lights on.
Addressing this need, Nasscom has asked state governments to provide exceptions to them so employees can travel to their offices for mission-critical functions. Both the governments of the states of Maharashtra and Karnataka -- where Mumbai and Bangalore are located, respectively -- have apparently been helpful in sanctioning this travel.
What we have now then, is a radically new world. There is no doubt that both IT and global businesses will soon have to undergo a serious re-think of their strategies in order to still be able to take advantage of cost-efficient, overseas skilled labour, even during tense times. As Murugesh of Nasscom says, "In the longer term, a completely new outsourcing model has to evolve."