The IoT opportunity for IT services providers

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Most industry watchers are talking about the need for information technology (IT) services companies to become more product-focused and less people- and services-focused, thereby creating “non-linear” revenue models for themselves. This in the wake of massive advances in technology and a steep drop in the cost of providing these technologies to billions of people through the Internet. Robots, they say, are now capable of doing the work of humans and that process automation through technology will cause several Indian IT programmers to lose their jobs.

But every cloud has a silver lining. The Internet of Things (IoT) presents a massive opportunity to Indian and other IT services providers who don’t want to—or can’t—move away from a
people-centric model. Many recent studies by Gartner and other analyst firms promise that IoT will be the next wave of technology taking over the world.

Interestingly, however, many of these analysts are also tempering expectations by saying that IoT is not for everyone and that its uptake in certain industries will be significantly lower than in other ones. They also cite a recent study by The Economist that claims that less than 40% of global CEOs even know what IoT means.

I don’t see this as being a problem. The cost of technology and bandwidth are both always dropping, and soon the IoT wave will become a deluge. If IoT takes off, just as new technologies often do (even if they’re not always better technologies than the ones they replace), the IoT hype can make for hefty IT services revenues for India’s IT sector.

I will digress just enough to provide a simple definition to ease the reader’s understanding. IoT simply means that many more of the devices and “things” you use everyday will become inexorably linked to the Internet and therefore to the various IT systems owned by the companies that first built these things, so that these companies can now monitor how you use their things and make “helpful” suggestions. Your washing machine is such a “thing”, just like your iron, your car, your refrigerator, your fitness monitor bracelet, and maybe even your e-cigarette. What this means is that there will be some level of computing power in each of these things, and that each of these things will in turn be connected to the Internet—either through a telecom services provider—or your home Wi-Fi.

The possibilities are endless. A febrile imagination can dream up all sorts of uses. Your refrigerator notices that you’re running low on milk, informs a giant computer somewhere up in the sky (oh, sorry—the cloud) and voila, your phone talks to you and tells you to stop at the grocery store on your way home from work so that your breakfast tomorrow can include a good old Indian chai rather than black tea. Take this a step further—the refrigerator informs the neighbourhood grocery store and the doodhwalla is at your doorstep in a trice.

IoT is not new. This sort of stuff has been tried for decades—and it’s intrusive. When I worked for Xerox—long before Netscape brought the Web to the world in a graphical user interface—the company made much of its “Remote Interactive Communications” (RIC) module, which was standard equipment on its high volume photocopying machines. This module, which needed its own dedicated phone line, sensed when something was about to go wrong with your copier—and let Xerox’s central customer repair and service systems know that something was about to go awry before it actually did—thereby causing a Xerox service rep to arrive at your door demanding to service your machine when it hadn’t broken down. This was a source of great annoyance to the secretary who was trying to get multiple copies of a document xeroxed and bound in time for the boss’s meeting in the next hour. Little wonder that “RIC” calls soon got relegated to a false alarm status and were routinely ignored by Xerox’s 15,000-person US service force. And I certainly don’t want my refrigerator’s manufacturer knowing the contents of my fridge (in which I happen to be conducting an advanced chemistry experiment on how long I can keep a coconut chutney fresh).

But it’s just this sort of thing that is manna from heaven for an IT services provider. You first charge a hefty sum to build bespoke and custom solutions for refrigerator “RICs”, washing machine “RICs”, iron “RICs” and car “RICs”, and then charge again for constantly tweaking and redefining their systems as clients continually bring out new models of their “things” or their end customers change their use patterns and demand more privacy—or finally in desperation, cut off the Internet connection to the “thing”—much like harried secretaries all over the US pulled out the phone lines from their Xerox copiers, preferring instead to call for service when the thing was actually broken. As a wag once said, the only thing that is getting more expensive in IT is the people. But India will long continue to have the advantage of a less expensive workforce than in the West.