IT services – how generative AI is changing applications development and maintenance
In today’s episode I take a quick look at how applications development and maintenance, which is about two-thirds of India’s IT sector revenues, is changing, but first a few headlines. Beyond Next Ventures, a Japanese fund focused on early-stage deep tech startups in Asia, is targeting up to ¥25 billion (about $168 million) for BNV Fund 3, its third fund, TechCrunch reports. And yesterday, BNV said it completed a first close of ¥10 billion ($68 million), which it will invest in ventures in areas including robotics and biotech, according to TechCrunch. Here in India, SaaS startup SuperOps.ai, which provides software tools for managed services providers to simplify their IT management and workflow process, has raised $12.4 million in Series B funding led by Addition and March Capital, the Chennai company said in a press release, with participation from existing investor, Matrix Partners India. One thing today Tata Consultancy Services kicks off of Q2 results for India’s IT sector today. Infosys reports its earnings tomorrow. So, instead of the usual curtain raiser on their outlook, I wanted to draw your attention to a trend in the industry, touched off by the rise of generative AI, that is already looking like the beginning of the end of the applications development and maintenance model – or at least ADM as we know it today, which accounts for two-thirds of the $245 billion sector’s revenues. First, customers are taking various software services back in-house, according to Bernard Charles, CEO and soon-to-be Chairman of Dassault Systemes. Last week, during his latest India visit, I got a chance to speak with Bernard, a 40-year veteran of the French 3D software giant, with India’s biggest conglomerates as customers, and deep partnerships within India’s IT sector. India’s IT services industry has a very strong engineering R&D segment, but companies like Tesla, for example, want to “control the destiny of their end products themselves,” he said, when it comes to the mix of software, electronics and hardware. And this is happening in biotech and pharmaceuticals, smart manufacturing, mechatronics systems and so on – areas that are relevant to Dassault, but also important vertical practices for India’s IT sector. So, on the flip side, are companies like Infosys taking on more full-product level work, I asked. Yes and no, Bernard says, because there’s another dimension to this, which is to help them to transform themselves, so they can provide a lot more consultancy than before and play a bigger role. “So, I think there will be a new adjustment,” he says. “A lot of this industry has been sustained with the massive development of code to integrate legacy systems. And they have made their money on that. But I think the future, when it comes to our platform, is low code, no code, used natively to produce your own code, not with programmers but with a generative AI.” And this is inevitable. “It's happening. And this is what I call low code no code, to generate code with robots as opposed to programming them manually,” Bernard says. A couple of days ago, I got a chance to meet Sridhar Vembu, CEO of Zoho, India’s largest software products company, and he has similar views in relation a related area – software developer productivity, which he sees as very large opportunity for his company. He says it’s a really big deal and is investing heavily into R&D in this area. “I believe that productivity in software development itself can be easily tenfold, maybe 20-30-fold in the long term,” he told me. Generative AI use cases are emerging at light speed, Stanton Jones and Olga Kupriyanova wrote in a newsletter recently, at ISG, a consultancy that tracks outsourcing contracts around the world. “This will have an outsized impact on the biggest service line within the sector – applications development and maintenance,” they say.