“India’s IT industry is toast. It’s doomed, they’re living in the past,” Vivek Wadhwa declared in the keynote address at Nexus 2014, the premiere conference for Latin America and Caribbean IT innovation and business process services.
Exponential growth of disruptive technologies is creating massive opportunities for Latin America and the Caribbean to leapfrog India’s ITO industry and become an automation workshop and a showcase for the application of cutting-edge technology, said Wadhwa, the vice president of innovation and research at Silicon Valley’s Singularity University, in a stimulating opening speech. Over 200 registrants from 12 countries, including senior IT, BPO and finance decision makers, attended the fourth edition of Nexus, an annual nearshore industry event, at the Hyatt Regency Jersey City on the Hudson.
Wadhwa believes that “IT services is a losing game” that “cannot succeed” because service providers’ clients now have such easy and affordable access to advanced technology and downloadable apps. In short, “They have better technology at home than the IT companies provide them with.” IT and BPO will remain steady for the next few years, Wadhwa said, but the industry is becoming stagnant. Latin American service providers must prepare for change, he added, because “If you don’t transform yourself then the industry’s going to kill you.”
Latin America Must Capitalize
“My advice to Latin America is to look forward. Forget about catching up with India; it could leapfrog India because we’re on the cusp of a technology breakthrough that could transform industries and mankind. This is how fast things are moving. We are now in the exponential era where we’re going to see more change than we’ve ever seen before,” said Wadhwa, the author of “The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent,” who was recently named one of the 40 “Most Influential Minds in Tech” by TIME Magazine.
As technology has advanced rapidly and costs have dropped dramatically, the business landscape is being completely transformed, Wadhwa said: “The competition for Fortune 100 companies is no longer from overseas as people believe, it’s literally two guys in a garage coming out of nowhere with an exponential technology and that creates disruption and it creates opportunity.”
Latin America and the Caribbean are well placed to take advantage of these new opportunities. Wadhwa implored the region to take a leap forward and begin adopting new technology – implementing greater use of drones and even self-driving cars, for example. By building and perfecting new technology, the region could then showcase it and bring it to the United States, Wadhwa said: “Disruptions are happening in every industry where technology can be applied. Latin America can be America’s automation workshop, its research and development center, and its exponential technologies back-office.”
Much of the disruption – and many of the biggest opportunities – will come in digital manufacturing, finance and healthcare, due to advances in computing, artificial intelligence (AI), medicine, robotics, 3D printing and synthetic biology, Wadhwa explained. In the healthcare industry, for example, service providers should prepare to tap into the abundance of Big Data that will soon be derived from sensors in your smartphone. This constant stream of personalized data will enable AI physicians to make superior diagnoses than human doctors, the speaker said.
Financial Disruption = Big Opportunity
While the adoption of disruptive technology may be slow in the United States, “it will be much, much quicker abroad,” Wadhwa asserted, citing the adoption of biometric payments in India and digital currency in Kenya, where the virtual M-Pesa already accounts for 25% of GDP.
“It won’t be long before you start seeing digital currencies in Latin America … most likely in this decade,” Wadhwa added, noting that countries such as Venezuela and Ecuador have already discussed introducing digital currencies in order to achieve greater independence from US banks.
Moreover, the onset of crowdfunding, crowdsourced financial decision making, person-to-person lending and microfinance means venture capitalists and banks are becoming increasingly irrelevant, Wadhwa noted: “If we don’t need currency, identification is done using biometics, and consumer loans are crowdsourced… why do we need physical banks?”
Such a seismic shift in the financial industry means finance and accounting outsourcers will have to be quick to adapt. “You better be ready for digital currency because when it hits you it’s going to affect your business before you know it,” Wadhwa said. “We’re talking about a major disruption to the financial industry in the next five to ten years. So if you’re betting on finance services and your current customers then think twice, because they’re going to be disrupted. Maybe you want to help them, maybe you want to start getting to the future advances and coaching your customers on how to move forward. It’s a huge opportunity coming up.”
In order to capitalize on the coming wave of opportunity, Wadhwa believes that Latin American nations should focus more on engendering a stronger culture of entrepreneurship. “Government regulations, a fear of failure and social stigma” have held entrepreneurship back in Latin America, while the education systems across the regions are also often very weak, he admitted, but programs such as Startup Chile – which Wadhwa helped to design – have helped to overcome such problems.
Startup Chile drew foreign entrepreneurs to the South American nation for six-month periods and “after three years, Chile had gone from having practically no entrepreneurship to being called ‘Chilicon Valley,’” Wadhwa said. “The local ecosystem transformed very rapidly and this is only the beginning. Two or three years from now you will see more and more entrepreneurship.”