Starbucks Corp. is brewing a tempest in a chai latte cup.
The coffee chain is tapping artificial intelligence to develop in-house alternatives to systems by Microsoft and IBM that track inventory and manage equipment, Bloomberg News reported last week, after reviewing an internal presentation. According to the article, the Seattle-based company has been working for several years to replace Oracle’s point-of-sale system.
This will be disturbing news in Bengaluru and Hyderabad: Maintaining these very technologies for large multinationals like Starbucks is the bread and butter for the 6 million coders employed by India’s outsourcing industry.
The AI adoption craze is looming over what’s promising to be another lackluster earnings season for IT services exporters. Last week, Tata Consultancy Services Ltd., the biggest among them, reported 0.4% growth in revenue over the previous three months after stripping out currency fluctuations, the slowest expansion in a year. While the company has shed 3% of its workforce in the past year to about 594,000, the spending on third-party specialist contractors to bridge the firm’s own skills gaps ate into revenue. Net profit margin shrank.
At smaller rival HCL Technologies Ltd., sales in the three months to June slipped 0.5% quarter-on-quarter after holding exchange rates constant. The management kept its annual revenue growth guidance of 1% to 4% unchanged, but it still ended up shrinking its employee base by nearly 3,300 people — the sharpest contraction in close to two years. For HCL Tech, too, a rise in subcontractor costs mitigated the wage savings.
