IT vendors ‘patently’ sharpening focus on developing newer technologies

Indian IT vendors seem to be taking a cue from leader IBM with increased focus on creating products, platforms and ‘as-a-service’ model for better returns from licence fee. This was evident from the number of patents filed by Tata Consultancy Services and Wipro on technologies such as Artificial Intelligence, cloud, Internet of Things and robotics.

In 2017-18, between TCS and Wipro a total of 926 patents were filed with TCS leading the pack by filing 522 and Wipro 404. And, cumulatively both have filed a total of over 5,900 patents. And, most of the patents were in emerging technologies that are starting to penetrate at a rapid pace across industries globally.

Infosys and Cognizant declined to give number the patents filed.

In 2017-18, TCS filed 522 patents taking the cumulative patent applications by the top Indian IT company to 3,916. It has been granted 654 patents as on March 31, 2018, according to the company’s annual report. A significant part of its innovation focussed on AI and automation, IoT platforms, robotics and image processing capabilities.

Wipro last financial year filed 404 patents. “We continue to invest and scale intellectual property via platforms, products, frameworks and solutions, enabled by innovative commercial constructs and delivered in an ‘as-a-service’ model, thus truly variabilising their costs in a risk-reward model (eg transaction-based, outcome-based pricing),” said the company’s annual report.

Many of patents were in emerging technologies and serve as a foundation for our new technology platforms, including AI, IoT, connected devices, and autonomous vehicles, the report said. In 2017-18, the number of patents, Wipro held (and applied for) crossed 2,000, the report said.

But, Indian companies have a long way to catch up with the leader IBM. For the 25th year (in 2017) in a row, it set a new record of 9,043 patents with nearly half of those in AI, cloud, blockchain, quantum, security and other technologies that will power its portfolio for years to come.

IBM has a unique position as a software, hardware and services vendor, said Bozhidar Hristov, Senior Analyst at the US-based Technology Business Research.

Promoting ‘as-a-service’ model

However, IT services vendors will continue to expanding their proprietary IP as the shift toward platform-based service delivery allows them to take greater control of the risks associated with promoting and adopting of ‘as-a-service’ based annuity models. Companies are demanding more for less from them as the promise of automation is arming them with bargaining power. The successful vendors will be required to start charging for the IP on a license basis otherwise they face race-to-the-bottom scenario, he told Business Line.

As work gets automated, the importance of labour arbitrage diminishes and the profit pool reconfigures around the IP owners. Good examples of this are TCS and Cognizant where each of them has built/purchased important industry platforms, said Peter Bendor-Samuel, CEO, Everest Group, a research firm.

TCS (in insurance) and Cognizant (in healthcare) are using investment in these sectors to differentiate their offerings and capture large contracts.

TCS’ run of mega deals is largely based on leveraging its insurance platform and Cognizant strong position in healthcare was strengthened by its TriZetto acquisition.

Accenture has dramatically increased its spending on IP, he said.

Source: The Hindu