Other BriefingsAI and Automation Processes in India’s Economy
India’s internet user base is the fastest growing in the world. Digitization of the country is surging through initiatives like ‘Digital India’ and accelerating access to internet and telephony provided by India’s telecom companies.
As internet connectivity improves, the volume of commercial activity conducted through digital platforms is also increasing.
These processes generate vast amounts of information, which businesses can use to improve their performance.
Internet-connected technologies such as artificial intelligence (AI), automated software, and machines are used by businesses to analyze and respond to these huge amounts of raw data generated online to make informed decisions that streamline their work processes, enhance productivity, and enable radical innovation.
Yet, before we move further, we need to first understand what these new technologies are and how do they impact industry. Finally, we discuss the impact of AI and related technologies on India’s future economic growth.
AI and its impact on industry
AI refers to the application of computer software to tasks that generally require human perception.
The technology stimulates machine intelligence by teaching them audio-visual perception and reasoning. Such machines can then rationalize and solve problems like a human, and much more efficiently. The study, technology, and processes enabling this has resulted in new knowledge segments like ‘data analytics’ and ‘machine learning’ (ML).
AI systems find application in various business processes, including customer services, marketing, logistics, and data analysis.
For instance, machines can be programmed to perform repetitive tasks to improve efficiency and accelerate output targets.
AI in the Indian economy
Businesses and factories in India are beginning to appreciate the benefits of AI systems, and are increasingly investing in the adoption of smart machines and automated technologies.
Recently, the country’s premier engineering and research institute, the Indian Institute of Technology (IIT), Delhi and the Automation Industry Association (AIA), entered into a partnership to develop technology in the area of smart manufacturing.
In the information technology (IT) sector, leading Indian technology firms such as Wipro, Infosys, and TCS are developing new products to meet changing demands.
These companies, which traditionally provided back-end services to foreign clients (Business Process Management or BPM), are now diversifying their capabilities, such as by providing AI support through software developed in-house.
In labor-intensive industries like retail, automotive, manufacturing, logistics, and agriculture – automated machines are used to make up for productivity gaps and increase efficiency.
For instance, in the automotive segment, carmakers like Hyundai, Ford, and Volkswagen have automated entire body and paint shops in their Indian factories.
Besides increasing time efficiency, automation also allows carmakers in improving quality, achieving scale, and responding to sudden market changes with ease.
Startups in India are responding to this through targeted innovation.
For instance, Bangalore-based startup GreyOrange has built robots targeting supply chain management (for the e-commerce sector, among others). Their robots can organize about 600 pieces in an hour; a human can manage only 100 in the same time.
Similarly, the services sector is using AI systems to perform repetitive and mundane tasks. In India, ICICI bank has employed bots to perform about 40 percent of its back-end procedures related to banking, agribusiness, and customer services. Bots or web robots are software applications that run automated tasks.
Another industry application of AI is what is known as the ‘internet of Things or IoT’. IoT refers to physical devices that are internet-enabled, and include vehicles (self-driving cars), buildings, and electronic items.
In ordinary terms, these devices are ‘connected’ and ‘smart’ as they are internet-enabled, which allows them to collect and exchange data, and thereby function intelligently on their own.
The information these machines generate has, in turn, facilitated the emergence of data analytics, which businesses use to understand customer preferences and predict market trends. The large volume of information cannot be analyzed by a human, but can be processed by machines and automated processes.
Businesses in India’s IT, finance and banking, and market research sectors are among those using such specialized technology to mine data to make effective decisions.
For example, Wipro is servicing clients in the telecom sector with its AI system known as HOLMES. Another tech stalwart, Infosys, is offering its own AI software known as Nia in the finance sector to handle large data volumes – some to the tune of 596 million trade transactions on a 100-node cluster.
Nia achieved a record-breaking data insertion rate of 130,000 records per second or 18.22 MB per second.
The application of AI systems in non-manufacturing, non-IT sectors is also being explored.
In the healthcare sector, AI systems are being used to make up for the shortage of medical professionals and equipment to diagnose and treat illnesses.
Tricog Health Services, a Bengaluru based startup, has developed a machine that conducts an ECG in a few minutes. Tricog aims to provide instant diagnosis by fitting internet-enabled sensory devices into ECG machines.
The AI challenge to India’s workforce
A major worry for India is AI’s impact on the country’s workforce. In 2016, the World Bank estimated that 69 percent of jobs currently in India are at the risk of automation.
Routine and repetitive tasks such as customer support and software testing will be relegated to AI systems. Businesses will be pushed to create new products and services at a faster pace.
It is likely that new roles in middle and senior management will be created to manage AI systems. The jobs of the future will most certainly require a mix of critical thinking, collaboration, and creativity.
The current workforce in India is, on the other hand, more traditionally trained – to perform routine tasks and services and replicate processes and products. This is why major technology companies such as Accenture, Intel, Wipro, Microsoft, and Google are today retraining their staff in machine learning and automation to meet the requirements of future roles.
Yet, while India’s services sector is modifying roles for staff, it is changes anticipated in the manufacturing industry that will be most crucial. India relies on its expanding manufacturing sector to solve the crisis of unemployment among its youth (for instance, through Make in India). Automation in manufacturing necessitates changes in the country’s skilling industry to ensure that the labor force is trained for the jobs getting created.
Meanwhile, automation could make manufacturing still cheaper in India – attracting greater interest from foreign investors.
AI is the next disruptor
At present, AI is still in its nascent stage, and is mostly used for processing large amounts of data.
Why it is seen as the next great disruptor, though, is because of its potential to change core business processes, factory processes, and the very nature of work performed, just as the previous disruptors – personal computing, internet, and smartphones – achieved.
With the rapid modernization of its infrastructure, and increase in digital connectivity, India is poised to become a hub for AI-enabled businesses. Effective utilization and knowledge creation of AI systems could well propel the country to greater economic efficiency by plugging current productivity gaps.
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Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout India and the Asian region. We maintain offices in Delhi and Mumbai and throughout China, South-East Asia, India, and Russia. For assistance with India investment issues or into Asia overall, please contact us at india@dezshira.com or visit us at www.dezshira.com.
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