A lot of IBM’s AI platform watsonx was built in India: Country head Sandip Patel

Sandip Patel, Managing Director, India and South Asia, IBM

Majority of technology giant IBM’s artificial intelligence (AI) and data platform watsonx was researched and developed in India, said Sandip Patel, managing director, India and South Asia at IBM, in line with the global trend of technology companies increasingly looking to expand their global captive centres in India for skilled tech talent.

Watsonx platform was launched in May 2023 after a decade of IBM’s previous version of the software Watson, a computer system which once competed on TV quiz show Jeopardy against its two all-time champions gaining attention.

According to Nasscom’s State of Data Science and AI Skills report, India currently has around 16 percent of the world’s AI talent pool — second only to China.

Speaking at IBM’s flagship event Think in Mumbai, Patel said, “We are truly the embodiment of innovating and developing in India -- for India and for the world. So a lot of what you saw with watsonx including development work and the design work happened in India through the research and software labs, and we continue to drive that innovation.”

“A lot of the important development actually happened through our research and software labs (in India). IBM’s team globally collaborates to develop products that are components of the main software,” Patel added.

Almost 80 percent of the India research workforce is involved in researching and developing AI capabilities, Sriram Raghavan, Vice president, IBM Research AI told Moneycontrol on the sidelines of the event. He did not divulge details on the company’s India workforce numbers.

According to media reports, nearly one-third of IBM’s total global workforce of 2.8 lakh employee base is based in India.

In India, IBM has expanded its teams in to emerging clusters including Kochi and Gandhinagar. Kochi also has an AI centre of excellence.

During his visit to India last month, IBM’s chairman and CEO Arvind Krishna, said that India should develop sovereign capability in AI and focus on setting up a national AI computing centre. Globally, there has been a trend of increased investments in computing infrastructure due to rapid technological advancements.

In May, Krishna had also said that IBM expects to pause hiring for backend roles it thinks could be replaced with artificial intelligence in the coming years.

Hiring in back-office functions — such as human resources — will be suspended or slowed, Krishna had said. These non-customer-facing roles amount to roughly 26,000 workers, Krishna said. “I could easily see 30% of that getting replaced by AI and automation over a five-year period.”

That would mean roughly 7,800 jobs lost. Part of any reduction would include not replacing roles vacated by attrition, an IBM spokesperson had told Bloomberg.

IBM bullish on India

Amidst global slowdown in technology spending by customers of IT services and software companies, India market has remained steady, said the company’s senior executives.

“When you look at all the indicators for India, both macro and micro, we haven’t necessarily seen a slowdown in India in terms of the fundamentals of where the market is growing… Though globally, there are pockets of slowdown. But I think people are still looking at ways to invest into tech … that continues. Domestic market I don’t see any slowdown,” Patel said.

He added, “Technology always tends to be a deflationary force across any indicators that you see around the world. And given the trend that we are seeing with digitisation, people moving to automation and so on, I continue to stay very bullish about how we see the tech prospects in India.”

According to Paul Burton, General Manager, Asia Pacific at IBM, demographics and the ratio of smaller number of people entering the workforce as compared to the number of people retiring could pose a challenge in the Asia Pacific region.

“I don’t foresee things slowing down. But there are certain macro trends that we are aware of, that are salient, and that will have an impact. Demographics is perhaps the biggest trend of our time where we see smaller cohorts of labour entering the workforce compared to larger cohorts of labour who retire,” Burton said.

Meanwhile, within this small cohort of labour, finding people skilled in technologies like AI, automation and hybrid cloud is an even bigger challenge which could lead to higher labour costs, he said.

Interestingly, India is uniquely positioned for this too. While more than half of the world is seeing a decrease in working-age population and finding it hard to fill in jobs, India is home to more than 600 million people aged 18-35, with approximately 65 percent below the age of 65.

Speaking of possible pricing pressures on deals, with the use of AI reducing need of too many people on certain projects, Burton said that this situation would in fact get balanced out as developing economies continue to invest in more technology.

He explained, “There are a couple metrics if you go to advanced economies like the US or Germany and Singapore in this region, the size of the technology market as a percentage of GDP is typically above two per cent. In some cases, it can be 5-6 per cent as well.”

He added, “In other countries, including India and in APAC, tech spends will be less than 2 per cent. It would be even less than 1 per cent in some geographies. But the good part is that the GDP in some of the APAC countries is growing. Indonesia's market is growing at 5.6 per cent, India is at 7 per cent. So these economies are developing quite rapidly by consuming technology.”