Can Bitcoin save the Indian IT Industry?

8 min readJun 30, 2015

Indian IT needs to move up the value-chain

As the major Indian IT companies trim down on the number of employees who join as entry-level coders while trying to find ways to increase revenue per employee, the writing is on the wall for “business as usual” get the job done by “throwing labor at the problem” type of work.

Many clients of Indian IT giants are no longer seeing as much value in these type of consultancy agreements and industry watchers see this as a warning sign to the Indian IT ecosystem.

Infosys, one of the bigger IT firms sees this as a sign of a maturing industry and it wants to move away from providing only labour-intensive, lower-margin information technology and back-office services to higher margin value added services.

Ravi Venkatesan, Baker Scholar from Harvard Business School and now Chairman of Social Venture Partners in India recently said that:

India’s IT industry is unlikely to remain the amazing job-engine that it has been. This party is coming to an end. A combination of slowing demand, rising competition and technological change means that companies will hire far fewer people. And this is not a temporary blip- this is the new normal.

Wipro’s CEO, TK Kurien went even further and said automation can displace a third of all jobs within three years while Infosys CEO Sikka has outlined plans for Finacle to bring banking innovation through innovative APIs.

Enter Indian IT and Bitcoin

Friedrich Nietzsche once said:

“The snake which cannot cast its skin has to die.”

This couldn’t hold more truth for the Indian IT industry and the current challenges it needs to overcome.

The largest Indian IT companies, including Tata Consultancy Services (TCS), Infosys and Wipro are now investing in and evaluating new technologies, one of which is block chain technology, the underlying technology of the digital currency bitcoin.

With one in five Goldman Sachs employees working in India along with a huge credit card company presence represented by MasterCard, Visa and American Express it only makes sense that Indian software engineers turn toward bitcoin and start to get very familiar with the technology that will transform Finance in its current form from what we know today.

Transactions already happen in India, there are countless FIX Protocol developers in India who are already familiar with this code, one which moves over 5 trillion in foreign currency around the world.

In addition to the FIX developers, there are probably 10 times as many workers who are familiar with the laborious back office trade and settlement accounting procedures that are a big part of the daily work that goes on at all the major financial institutions in the world.

This is the type of work that is in direct fire of having to adapt to bitcoin’s smart contracts and distributed ledgers that Silicon Valley hopes will transform finance by reducing costs and increasing transparency tenfold.

India should not miss the Bitcoin boat

As major financial institutions like Goldman Sachs, UBS, Westpac, Santander and countless other banks are starting to embrace the blockchain and its benefits, India’s IT companies are starting to pay attention and this is a good thing.

G.K. Prasanna is the Chief Executive & President, Global Infrastructure Services at Wipro and in a recent paper he wrote: ‘The Trend is Not Your Friend: Is Your Technology Ready for the Challenge?’ you can see he is of the opinion that Bitcoin will have a place in the future of Finance.

Postal systems and banks merely serve as examples of well-entrenched businesses that are under fire. Many others businesses must also reshape themselves to meet customer expectations. Take for instance currency which is fundamental but is also undergoing a dramatic change. A few years ago, no one would have dreamt that a non-government entity could issue a new currency. Yet, Bitcoin consumers and transactions across the world are growing.
This is despite a major scandal associated with the virtual currency and the fact that no country recognizes it. Bitcoin popularity stems from the fact that transactions in this frictionless payment technology can be extremely cheap, small, immediate and anonymous. It can completely replace the current — (extortionist) legacy payment processes. What kind of infrastructure will be required to run billions of reliable Bitcoin transactions worth trillions each day across geographies? This may appear to be a hypothetical query because of the open questions around Bitcoin, but it may be worth thinking about this: will your business be impacted if customers demand that you accept Bitcoin payments?
What will be the outcome of such developments, driven by incessant waves of unpredictable change in customer behavior, motivation and buying patterns? Are basic business assumptions a thing of the past? The outcome is overwhelming and, to a degree, confounding. Here is an example that provides us considerable food for thought: One of the leading camera companies today is a phone company. The change has hurt the traditional imaging business. Is your business going to be undermined next because customer demands have changed? The interesting element is that this competition and disruption is not from within industries but from outside, from unexpected and non-traditional challengers. For business strategists and planners this presents a unique and disturbing problem. For years businesses have invested in improving efficiency in the belief that it will give them a competitive edge. But today, efficiency alone is inadequate.

Tata Consultancy Services (TCS) on Bitcoin

Suren Kumar, Lead Partner, Banking & Financial Services at Tata Consultancy Services, has more than 20 years of experience serving as a management consultant and advisor to multiple clients. He has been very active in learning about Bitcoin and writing about it for his company.

In his current role, he is responsible for the strategy and direction of clients in the banking and financial service sectors. He develops programs to enhance business processes and it seems TCS is on the right track by having him pay close attention to Bitcoin. He has written five very good articles on Bitcoin exploring its use in Banking.

In addition to Suren’s interest, it is really important to note that Srinivasan Varadarajan, the Global Head for the Banking and Financial Services Practice at TCS covered Bitcoin extensively in his white paper: ‘The Bank of the Future’. Below is brief excerpt from the paper.

Another example of technology influencing cash usage in banking is the bitcoin or, more specifically, the block chain, which has the potential to change the very fundamentals of money and finance. There are three basic aspects to understanding the bitcoin — the protocol, the currency, and the infrastructure.

Infosys on Bitcoin

Infosys started to work on improving its core banking software Finacle and has gone on record by saying they are evaluating ways to incorporate applications based on bitcoin’s blockchain technology. This is really important because Finacle is the industry-leading banking solution, it is the choice of banks across 84 countries and serves over 547 million customers — nearly 16.5 percent of the world’s adult banked population.

The company recently appointed Michael Reh as the head of Finacle and he is currently determining what benefits the blockchain can provide and how Finacle can use them to serve their banking clients better.

“I don’t think we can say it (Finacle) is being structurally reworked. It is a leading product recognized globally, but surely there are areas that need re-engineering. How do we make it more compatible in the age of mobile banking, and what other applications we need to build, develop on Blockchain so that we can offer benefits to our clients,”

said a Finacle executive.

“The thing with this (Blockchain) is that we still do not know the full technology impact it can have. More than just knowing the payments, we can get insights in legal documents, or use for even credit-worthiness of parties. All this obviously makes your (core banking) product stand out,”

said another Finacle executive.

Jost Hoppermann, vice-president, banking applications and architecture, at Forrester Research sees Infosys working on the technology behind Bitcoin as a very good development and believes it will give the company a “first-mover advantage”. He went on to say:

“As soon as the client base of global banking platform vendors (mainly banks) consider Bitcoin and Blockchain as mainstream, it will be the time when banking platform vendors should incorporate Bitcoin/Blockchain capabilities into their solutions,”

In a white paper titled ‘Internet everywhere to change banking business models’ written by Rishikesh Bagati, a lead consultant at Finacle Infosys he said this about Bitcoin:

Peer to peer payment pilots have already been tried out. There is no reason why one of the social networks will not come up with its own version of the bitcoin soon for transactions, cutting out the central bank’s role all together. Of course it is easier said than done and will require a whole bunch of changes in regulations, but it is not entirely sci-fi either.

Infosys also invited Peter Vessenes, Founder of the Bitcoin Foundation and CEO of CoinLab, Inc. to speak at their Confluence conference held in San Francisco back in April. He speak about digital currencies and the massively accelerating trend of retail banks finding it difficult to navigate in an online world?

Can bitcoin save the Indian IT Industry?

“The banking sector is getting disrupted far more than any other industry globally,”

Rajan Kohli, the newly appointed head of Wipro Digital, said in an interview last month.

As more banking institutions around the world look for better ways to transact, which include using Bitcoin, more IT Firms will begin to specialize in on-boarding and providing continuing services and consulting to service them. Indian IT companies are facing a do or die moment when it comes to bitcoin technology and they need to seize this opportunity fast.

Amith Nirgunarthy is the Founder of IHB.io, a premier site for bitcoin news, prices and data. It delivers world bitcoin news, bitcoin analysis and bitcoin market data through the Global Bitcoin Index™. He is Co-inventor of US Patent 7761359 B2, System and method for optimizing investments within an organization.