Using humanoids, IPSoft making the low-cost business model of Infosys, Wipro and IBM look like relics of the past

Chetan Dube, a former associate professor of mathematics at New York University, thinks he can teach IT services providers a lesson. Using artificial intelligence and humanoids, he is revolutionising the way computer networks are managed and making the low-cost business model of Infosys, Wipro and IBMlook like relics of the past. 

Dube, 42, and his company IPSoft operate in the area of IT infrastructure management, a fast-growing and lucrative part of the outsourcing business that Indian companies are keen to make deep inroads into. IPSoft stands in the way. "The last decade belonged to labour arbitrage; this decade belongs to advanced automation arbitrage," Dube told ET in a telephone interview from New York, where IPSoft is headquartered. 

A testament to this claim is the fact that IPSoft employs only 1,400 people for revenues of $700 million (Rs 3,400 crore). In comparison, Indian IT services companies typically employ at least 15,000 staff for each $1 billion in revenue. 

IPSoft, founded in 1998 by Dube and his colleagues from New York University, pulls this off by relying heavily on expert systems that mimic the human brain. They are capable of self-healing, self-learning and autonomously solving a majority of the problems that arise on computer networks. And IPSoft's correlation engines do what the human brain just cannot: pick trends by analysing hundreds of pieces of information all at once to diagnose and solve problems. Nearly two-thirds of all problems on computer networks are being solved by IPSoft with no human intervention at all, said Dube who studied electrical engineering at IIT Delhi. 

The global market for managing computer servers, desktops and communication networks is worth around $25 billion at present and expected to grow to $45 billion in the next four years, according to research firm Gartner. 
India's export of remote infrastructure management services was worth $4.3 billion in 2010 and the segment employed nearly 1 lakh people, data from Nasscom show. 

Humanoid Vs Humans 

Humanoid Eliza can identify problems, have natural conversations with users and solve them in few seconds compared with a few hours taken by human engineers 

At current rate, IPSoft will reach a billion dollar in revenues with just 2000 staff while Indian outsourcing fi rms typically employ at least 15000 staff for every billion dollar in revenues 

What's at Stake 

$25 billion 

Current global market for IT infrastructure management 

$45billion Likely size of this market in the next four years 

Business can Grow Seven-fold by 2020 

The software industry grouping estimates that by 2020, this business can grow seven-fold and contribute to more than a third of the total IT services revenues for India. For Wipro and HCL, the remote infrastructure management business makes up about a fifth of revenue. And all this is in IPSoft's domain. Indian tech firms and multinational companies such as IBM and HP have been developing common platforms to serve multiple customers with fewer staff. But none of them, analysts say, have made any significant progress in bringing real automation and intelligence to machines that move away from people-based support systems. 

Eric Goodness of Gartner said Indian and other outsourcing vendors' view of automation is confined to just the workflow and not true services automation where there is no human intervention. "When you have a hammer, everything looks like a nail," the Boston-based analyst said. "During my visit (to India), automation has been the centre point of discussions and there were some uncomfortable pauses I noticed in Indian boardrooms." 

Over the past few months, companies such as ING, Morgan Stanley and BT have shifted an increasing proportion of their IT management projects to IPSoft. At ING, the biggest Dutch financial services firm, IPSoft replaced TCS engineers with its platform to manage the trading desk across nine central European countries. Within the last year, IPSoft has acquired 500 customers. "Ninety-two per cent of the opportunities we have walked into, we have won," Dube said.