10/10/2016 12:58 AM IST | Updated 17/10/2016 10:06 AM IST

IT Industry Will Continue To Need People, But With Different Skills: IBM India MD Vanitha Narayanan

If India focuses on skilling, it can continue to be an IT powerhouse.

Kavi Bhansali/HuffPost India

To have survived the frenetic shifts in the technology industry for more than a century, as IBM has, a company periodically has to make high-risk bets on the new and the emerging. You back the right horses and you win big; make the wrong bets and you bite the dust. The field is littered with dead titans.

At IBM, the fabled, 105-year-old Armonk, New York-based tech company, the latest bets swivel around what CEO Virginia Rometty calls cognitive systems—software so sophisticated that it can solve problems better and faster than large teams of humans, and which keeps getting better at it. IBM's showpiece system in this domain is Watson. Named after the company's first chief executive, it heralded the cultural arrival of artificial intelligence when it won the American television game show Jeopardy! in 2011. Like the IBM supercomputer Deep Blue's victory against world chess champion Garry Kasparov in 1997, it made the world sit up and go "wow".

Kavi Bhansali/HuffPost India

It's easy to imagine how this technology can be useful in business. But give me a specific example, I ask Vanitha Narayanan, my breakfast guest for the day and the head of IBM in India and South Asia.

"Since we are having breakfast, I'll tell you the story of a café in Germany," she says. Normal analytics would look at long-term sales data, map it with time and help with projections and inventory management. But when combined with weather data, she tells me, IBM's systems figured that on cloudy days, people invariably ordered a certain pastry more than on sunny days. Now the café could cater more of it when cloudy days were forecast.

If we focus on skilling and innovation, we can be not just part of the new ecosystem, but drive the ecosystem. Vanitha Narayanan

"Cognitive is a lot more than artificial intelligence. These systems are constantly learning. They don't exhaust and they don't sleep. So you look at weather, you look at market news, you look at political news and anything else that affects sentiment. Because human behaviour is influenced by all manner of factors."

So does that mean that these systems can even help frame the questions better?

"Oh absolutely. Because you can't just programme for all kinds of possibilities. You will just end up with a whole lot of false positives."

We have sat down for breakfast at a lounge at the Leela Palace hotel in Bangalore. Narayanan is dressed in a smart blue tunic top (IBM colour!) and black trousers. And from the moment she walked in, she has been cheerful and involved, weighing questions and answering meticulously, dipping into her vast understanding of the industry and the company she joined in St. Louis, Missouri, on the last day of 1987.

Narayanan, who was named to the top role in India and South Asia in 2013, leads what is among India's largest private sector work forces. IBM doesn't disclose its headcount—its large labour force in India is a sensitive subject back home. But former employees and reporters who track the sector peg it close to 150,000. And although IBM operates in 170 countries, India is special. It remains IBM's fastest growing country, with $3.5 billion in revenues in 2014-15 (albeit with shrinking margins), and is also now a key hub for global delivery. Rometty, who is chairman, president and CEO at Big Blue, has visited India now for two straight years, and Narayanan is reputed within the company to be a key global lieutenant of the CEO.

Kavi Bhansali/HuffPost India

Our breakfast is a rather filling procession of cut fruit, flavoured yoghurt, probiotic milk and freshly squeezed juice. Narayanan asks for eggs Benedict (with salmon instead of ham) and I get poached eggs with asparagus (with parmesan fondue and truffle, and some crispy piadina, which is a kind of Italian flatbread).

As software gets smarter, there is also a fundamental shift underway in technology and services companies like IBM. Simply put, computers can do jobs that previously required humans, including developing software. 'Automation' in industry-speak, this is now a source of major anxiety in India's engineering colleges, many of which churn out vast numbers of semi-employable graduates. Hiring is now flat, and many companies are downsizing.

How worried should India be, I ask Narayanan. The IT industry is India's largest organized employer, home to some 3.8 million workers.

She gives me a longish answer, with three key messages.

"Automation is not new. We have been doing it at our research labs for a long time. Maybe there has not been as much talk about it in the past but it's certainly not new for us. It has been happening." Secondly, she explains, the shift is incremental. Even a cognitive system initially needs manpower to define and deploy it, ingest data from within the company as well as from vendors or suppliers or customers, before setting it off to its deep thoughtful slumber of learning to hopefully throw up business-bending insights.

And thirdly: "It's not as if you don't need people anymore, but the kind of people you need changes."

The bottom line is that some amount of creative destruction is inevitable in the software services industry.

And moving up the skills ladder will be a challenge for India, because its higher education system is notoriously bad at keeping pace with the real world and its demands. Indian software companies have for years typically hired engineering graduates and then trained them, before allowing them on the production floor.

Watch Vanitha Narayanan's response to our rapid fire questions.

Vanitha Narayanan on BWH

But Narayanan is optimistic at a macro level about India's place in the emerging order. "We have a young population, an English-speaking population, a large technical base. So if we focus on skilling and innovation, we can be not just part of the new ecosystem, but drive the ecosystem. If you see many other countries, they have an ageing population, and they cannot as easily and cost-effectively skill their people."

She is also unfazed about the gradual erosion of India's original advantage in IT—wage competitiveness.

"But look at all the new advantages we now have. The internet originally allowed the work to flow to India. Now with the cloud, any developer sitting, let's say at the Nasscom garage here, can download an API, develop a solution and sell it. A lot of the traditional barriers to entry Indian entrepreneurs faced in terms of access to high technology, access to capital and access to distribution systems, are all vanishing.

"Yes there is disruption, but it is leading to opportunities for innovation. We are today the third most active startup community in the world. The possibilities are in fact really remarkable."

Perhaps Narayanan is able to see the positive side to disruption because over a 28-year career, she has seen IBM embrace change and pivot in new directions successfully multiple times.

Critics of the Indian IT industry say that there is too much commoditized work with very little innovation and differentiation. Since cost then becomes the only leverage, margins inevitably go south. The slice of the sector that is seen as completely commoditized is the so-called enterprise applications development and maintenance business. It helps large companies maintain internal applications developed during the mainframe era, among other services. It's a low-margin business but continues to contribute a significant chunk of revenues to most Indian IT companies.

Will IBM continue in that business for much longer?

Narayanan points out that IBM has been a leader of sorts in exiting businesses, even profitable ones, that are not aligned with its overall strategy. This is of course true. IBM used to make PCs, servers and semi conductors. Not anymore. In India, during the boom time in the so-called Business Process Outsourcing sector, IBM's Daksh unit used to be a leading call centre operator. When that business became commoditized, it lost no time in exiting it.

But Narayanan says there is no case to exit the enterprise applications business as yet. "App management is not a business. It's a spectrum. And it's not a black and white case. There are 250 shades of grey in between. Sure there are some parts that are commoditized, which we may or may not do, but there are some parts of it that are still fundamental to our clients' business and it's not accurate to call it a commoditized business."

Kavi Bhansali/HuffPost India

Can Watson help solve India's great problems and is IBM working with the government to make that happen?

She almost jumps at the question. "I have always, always said that Watson is for India. Because what does Watson do? It can solve problems at scale..." And India of course needs large-scale problems to be solved.

She talks about the serious supply-demand gap India has in education—and possible solutions. Watson, for instance, can be a great personalized tutor. It can adapt to every learner's speed, prior knowledge and so on, and help in teaching.

"We do a lot of work with the government's skills development mission. They have councillors in the thousands and applicants in the lakhs." This is an ideal problem for Watson, which can match jobs and skills in a CV and add a layer of data about location, hobbies and so on, and do it way quicker and at scale than is humanly possible.

Only the woman can give birth, but the child can be raised by both parents. So we need to make sure the policies are available holistically to both...Vanitha Narayanan

My thoughts quickly run to the day Watson will take my job. If at a fundamental level my job is to select and publish stories on this website that the most number of our readers will engage with, Watson can quite likely get really good at it, with long-term data traffic and engagement data. Many news organizations already are experimenting with bots on commoditized news copy, like markets or sports scores. When robots are news editors, will they still be accused of political bias, I wonder.

I ask Narayanan about diversity. When she was named to the job in 2013, Narayanan was among the first women to hold the top job at a major IT company in India—in more than two decades of the industry. Aruna Jayanthi had become CEO at Capgemini India by then and Accenture India has since got Rekha Menon in the corner office. But none of the major home-grown IT companies have ever had a woman CEO.

Narayanan says that is a question best directed to those companies. "I'm fortunate to work at a company where gender has never been an issue. It's a complete meritocracy."

When it comes to policies to promote gender diversity, Narayanan says it is important to factor in the realities of parenting for both men and women. "Only the woman can give birth, but the child can be raised by both parents. So we need to make sure the policies are available holistically to both so each family can decide what is best for them."

In India, IBM now engages with family members when a woman staffer proceeds on a maternity break. "The support of the family is crucial in their return to the work place. Spouse, in-laws, parents. So we have education programmes. We have them come in to get a sense of the place and our culture.

"You can't do it alone. I have said this also from my personal perspective. You need people to opt in with you. The more people say it's our job, the easier it gets."

Kavi Bhansali/HuffPost India

She also points out that this kind of flexibility does not apply only to women. "I had a male colleague who said he wanted to shift roles because his son was in Class X and he didn't want to travel as much. There are people whose parents are not doing too well so they have to balance that."

She then tells me the story of the first interview call she got from IBM in 1987.

The person on the other end wanted her to fly in the very next day from Houston to St. Louis. They had a hiring freeze coming up and they had to fill the role before that. "And he said, 'I understand that your husband travels a lot and you have a three-year-old. Since this is such a short notice and you might not find someone to take care of the child, please bring her along, and we will have someone look after her while you go through the interview process.' That to me was huge. Those days you went to interviews where you were just an employee. No family, no personal stuff."

A few weeks after she joined IBM, Narayanan's daughter came down with chicken pox. And she had no leave or off days. "So my then boss said, 'Look, you take these manuals and go home. You can read them at home. You have got to take care of your little one, and that's not an off day.' This kind of thing really helps you bond with a company."

And sure enough, Narayanan never left IBM.

This is part of HuffPost India's exclusive interview series, Breakfast With HuffPost, presented by Lufthansa. The other interviews in the series are here.