AI Just Changed the Indian IT Business Model! Here's What Happens Next #softwarelyf — Transcript

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1. 0:00Have you noticed something? Everyone is
2. 0:01busy talking about the next AI model,
3. 0:04the next AI chatbot, or the next AI tool
4. 0:07that can write the code. But, I think
5. 0:09the biggest AI disruption is not any of
6. 0:11these. The biggest disruption is
7. 0:13happening in the business model of the
8. 0:15Indian IT industry. And if it succeeds,
9. 0:18it could completely change how the IT
10. 0:20companies make money in the coming
11. 0:22years. Hi guys, I'm Shashidhar, and I
12. 0:24have close to 20 years of experience in
13. 0:26the IT industry.
14. 0:30>> [music]
15. 0:32>> For decades, the Indian IT industry has
16. 0:33followed a simple business model. A
17. 0:35client comes with a requirement, the IT
18. 0:37company estimates how many engineers are
19. 0:39needed, how many months the project will
20. 0:41take, and how many hours will be spent.
21. 0:44And based on that effort, the client is
22. 0:46billed. We all know that. It's a model
23. 0:48we have all grown up with. Like, more
24. 0:50engineers means more billable hours, and
25. 0:53more billable hours means more revenue.
26. 0:55But, AI is changing that. Today, the
27. 0:58conversation is slowly moving away from
28. 1:00how much effort did we put in to what
29. 1:02business value did we create. And this
30. 1:05may sound like a small change, but it's
31. 1:07completely different way of thinking.
32. 1:09Let me explain with a simple example.
33. 1:11Imagine you're running a company, and
34. 1:13you want to improve your customer
35. 1:14support. One IT company tells you, "We
36. 1:17will assign 50 engineers and complete
37. 1:19the project in 8 months." And another
38. 1:21company tells you, "We will use AI to
39. 1:24reduce response time, lower your
40. 1:26operating cost, and improve your
41. 1:27employee productivity, help your
42. 1:29managers make faster decisions. And our
43. 1:32pricing will depend on the value that
44. 1:34we're going to create." Which proposal
45. 1:35would you choose? Most business owners
46. 1:37won't care whether you use 20 engineers
47. 1:40or 200 engineers. They care only about
48. 1:42one thing. "Did my business improve or
49. 1:44not?" That's exactly where the Indian IT
50. 1:47industry is heading now. Instead of
51. 1:49charging only for effort, AI engagements
52. 1:51are increasingly being linked to the
53. 1:53measurable business outcomes. This could
54. 1:55mean faster operations, lower costs,
55. 1:58higher productivity, and smarter
56. 2:00decision-making. And it doesn't mean
57. 2:02that engineers become less important all
58. 2:04of a sudden. No. In fact, enterprise AI
59. 2:07projects need experts from multiple
60. 2:09areas like AI consultants, solution
61. 2:12architects, machine learning engineers,
62. 2:14cloud specialists, data engineers,
63. 2:17security experts, integration teams. All
64. 2:19these people are needed. And you know,
65. 2:21every one of these still play an
66. 2:23important role. Remember, the work is
67. 2:25still there. Only the pricing model is
68. 2:28going to change. And as far as the
69. 2:30Indian IT industry is concerned, that's
70. 2:32definitely a huge difference. Another
71. 2:34interesting part is these AI engagements
72. 2:36are no longer just about building an AI
73. 2:38solution. IT companies are planning to
74. 2:40offer comprehensive packages to the
75. 2:42businesses. Like they help clients
76. 2:45identify where AI can create value. And
77. 2:47then they build the solution, integrate
78. 2:50it with existing systems, deploy it on
79. 2:52the cloud, then continue monitoring and
80. 2:54improving it over time. So here, the
81. 2:56point is instead of just delivering a
82. 2:58project and walking away, they stay
83. 3:00involved for the long term. That's why
84. 3:02many people see this as a win-win model.
85. 3:05All sounds good. But how do clients see
86. 3:07this? Well, businesses are actually
87. 3:10tired of buying technology based on only
88. 3:12promises. Every IT company claims their
89. 3:15solution will improve productivity,
90. 3:16reduce costs, and increase efficiency.
91. 3:19But after spending millions of dollars,
92. 3:21it turns out many organizations are
93. 3:23still facing challenges to see the real
94. 3:25business benefits. Now imagine an IT
95. 3:28company says, "We're confident enough to
96. 3:30connect part of our pricing to the
97. 3:32business value that we're going to
98. 3:33create." It's a great deal, actually.
99. 3:35Because now the service provider is not
100. 3:37just selling their technology alone.
101. 3:39They're sharing the responsibility for
102. 3:41the outcome. Actually, clients love
103. 3:43measurable results. If AI really reduces
104. 3:46processing time, the IT companies can
105. 3:48show the numbers. If operational costs
106. 3:50came down, they can measure it. And if
107. 3:52employees became more productive, then
108. 3:54they can very well prove it, right?
109. 3:56Actually, business leaders care far more
110. 3:58about measurable impact than impressive
111. 4:00technology demonstrations. So, we can
112. 4:03now understand that this outcome-based
113. 4:05pricing will be beneficial for the
114. 4:06companies. Then how about the IT
115. 4:08companies? How will they get benefited
116. 4:10with this model? Let's see. First, it
117. 4:12creates recurring revenue. AI is not
118. 4:15something you install once and forget
119. 4:17it. Models actually need monitoring.
120. 4:19Business requirements keep changing.
121. 4:21Data changes. Performance always needs
122. 4:23improvement. So, IT companies continue
123. 4:25supporting clients for years instead of
124. 4:27just completing one project and leave.
125. 4:29Second, if an AI solution creates
126. 4:31significant business value, companies
127. 4:34have an opportunity to earn better
128. 4:35margins compared to the traditional
129. 4:37effort-based billing. And third, the
130. 4:39relationship with the client becomes
131. 4:41much stronger. Instead of being just
132. 4:43another technology vendor, the IT
133. 4:45company becomes a long-term strategic
134. 4:46partner. So, it's a win-win deal for
135. 4:49both client and service provider. But,
136. 4:51you might ask me a question here that
137. 4:53how do you actually prove that AI
138. 4:55created the business result? Like, it
139. 4:57happened only because of the AI
140. 4:58solution? How to prove it? For example,
141. 5:01let's say customer satisfaction improved
142. 5:03after implementing the AI-based
143. 5:04solution. Great. But, was AI the only
144. 5:07reason behind it? Maybe company also
145. 5:09improved employee training or they
146. 5:12redesigned business processes or they
147. 5:14hired more people. These things could
148. 5:16also be the reason behind the business
149. 5:18outcome, right? In reality, business
150. 5:20results rarely depend on only just one
151. 5:22factor. That's why some experts say
152. 5:25outcome-based pricing is complex and
153. 5:27difficult. And the next challenge is
154. 5:29user adoption. Yes, you can build an
155. 5:31amazing AI system, but what if employees
156. 5:34or users don't use it? We have all seen
157. 5:36expensive software projects where people
158. 5:38continue using Excel sheets and old
159. 5:40manual processes. If they don't adopt
160. 5:42the AI solution, the expected business
161. 5:44results may never appear. In such cases,
162. 5:47should the IT company still be paid for
163. 5:48outcomes that never happened? That's a
164. 5:50debatable question. And then comes the
165. 5:52data quality concerns. We all know that
166. 5:55AI depends on data, purely. So, if the
167. 5:58client data is incomplete or poorly
168. 6:00maintained or inaccurate, even the best
169. 6:03AI system will struggle to produce the
170. 6:04good results. Because the technology
171. 6:07can't magically fix the bad data, right?
172. 6:09So, if poor data yields poor results,
173. 6:12who is responsible here? Client or the
174. 6:14IT company? And the next concern is
175. 6:16execution. This is another major
176. 6:18challenge, actually. Because building an
177. 6:20AI is one thing, deploying it across
178. 6:23large enterprises is another thing.
179. 6:24Like, you have legacy systems, security
180. 6:27requirements, compliance rules, complex
181. 6:29integrations, employee training, and
182. 6:31change management. Many things are
183. 6:33there. If any of these things fail, the
184. 6:35business outcome may also fail. And if
185. 6:38pricing depends on outcomes, revenue and
186. 6:40profitability are directly affected.
187. 6:42That's why this model is exciting and at
188. 6:44the same time, it's risky, too. It
189. 6:46demands confidence in technology,
190. 6:48confidence in execution and data, and
191. 6:50confidence that the client will actually
192. 6:52embrace AI. Now, here's the bigger
193. 6:54picture. This is not just about only one
194. 6:56company. The entire IT services industry
195. 6:59is watching this shift very closely.
196. 7:01Companies like TCS, Infosys, Wipro, IBM,
197. 7:04Accenture, all these companies are
198. 7:05literally watching what's happening.
199. 7:07Because if outcome-based AI pricing
200. 7:09succeeds at scale, it could redefine the
201. 7:11entire IT industry. For years, IT
202. 7:14companies sold engineering effort. And
203. 7:16tomorrow, they may sell business
204. 7:17results. That's a massive shift. Clients
205. 7:19may stop asking, "How many engineers are
206. 7:21working on my project?" Instead, they
207. 7:23may ask, "How much business value will
208. 7:25your AI create for us?" And that changes
209. 7:28everything. Like, sales to project
210. 7:30delivery to client relationships to
211. 7:32performance measurements to even career
212. 7:33growth. For IT professionals, there is
213. 7:35an important lesson here. Technical
214. 7:37skills will always matter, no doubt
215. 7:39about it. But understanding the business
216. 7:41problems is becoming equally important
217. 7:43nowadays because AI doesn't create value
218. 7:46on its own. AI creates value only when
219. 7:48it solves the real business problems.
220. 7:50There lies the real opportunity
221. 7:51actually. So, here is my question for
222. 7:53you. Do you think outcome-based AI
223. 7:55pricing is the future of the Indian IT
224. 7:57industry or do you think it's simply too
225. 8:00risky to become the standard? Share your
226. 8:01thoughts in the comment section. I would
227. 8:03genuinely like to know your opinion. And
228. 8:05if you found this video useful, don't
229. 8:07forget to like, share it with your
230. 8:09friends in the IT industry, and
231. 8:11subscribe to this channel for more
232. 8:12practical insights on career, AI,
233. 8:15technology, and the changing corporate
234. 8:16world. I'll see you in the next video.
235. 8:19>> [music]