Company Outsider: Why LTIMindtree’s old-school tests may not work in an AI-driven world

Two contrasting pictures emerged out of India's favourite industry last week. At the 28-year-old LTIMindtree, majority-owned by the giant conglomerate L&T, senior managers have to take tests for future promotions. The barely two-year-old startup, smallest.ai, on the other hand, hires people irrespective of the college they went to or even if they dropped out of one.

LTIMindtree says the competency exam allows it to assess the performance of its people. Mind you these aren’t freshers but managers, team leads, and lead architects with more than four years of company experience. That they have to sit for a test to prove their continuing benefit to the company seems a bit odd.

Exams as a way of measuring learning are increasingly being found wanting. School and college education experts have concluded quite decisively that exams force students into learning through narrow content rather than engaging experiences. 

Senior managers in particular learn outside the books, acquiring skills and abilities along the way that may not be visible, since they cannot be objectively measured. A good manager may fail miserably on multiple-choice questions related to coding and mathematics, but might be fantastic in building relationships with customers through empathy and an understanding of human nature.

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Subroto Bagchi, co-founder of Mindtree and its chairman before its hostile takeover by L&T in 2019, was considered a super salesman in his early days with various computer companies. 

In one of his books, he narrates the story of how he would identify potential buyers of computers in Delhi’s industrial districts by the ones who had an air-conditioner outside their office windows. Years later, he faced a particularly elusive potential client in the US whose dogged secretary refused to give him time with her boss. 

Bagchi found out that the man went to work on weekends when there was no one else in the office. Armed with that piece of information, he called him one Saturday morning at 8 am and, after a short conversation, was given the time he had been seeking. Try framing a test question for such ingenuity.

That doesn’t mean knowledge of coding or mathematical ability isn’t an added advantage in the IT industry. But a test with a score that is used as part of performance management seems seriously revisionist. While it may not be the reason for multiple senior-level exits at LTIMindtree over the past two years, it couldn’t be helping. 

Over the past two years, the company’s growth has been underwhelming compared to its pre-merger potential. The 4.4% revenue growth in FY24 trailed mid-tier high-flyers like Coforge and Hexaware and leaves it well short of its $10 billion revenue ambition by 2031-32. Competency exams may not be the formula needed to achieve those goals in an era when the whole concept of hiring, retaining and motivating people is under scrutiny.

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Smallest.ai’s founder Sudarshan Kamath minimized his company’s approach to hiring but summed up the debate well: “Brilliance can come from anywhere.” It can also go anywhere. The old order is changing rapidly in the IT services business. 

Speaking at a recent NASSCOM event in Mumbai, HCL Tech CEO C. Vijayakumar warned that AI’s impact on IT services is far more disruptive than past technological shifts like cloud computing and digital transformation. 

“This is very different. The changes that AI is assuring are very different, and we need to be more proactive to even categorise our revenues to create completely new businesses,” he said. 

While he urged companies to rethink their business models, it might require a completely different mindset to do that. 

InMobi founder Naveen Tewari has upped the alarms for the sector with his stark warning for software engineers, predicting that artificial intelligence will automate the majority of their work within two years. He speaks with the experience of his company staying on track to achieve 80% automation in software coding by the end of this year, a stark threat to the 2,000-odd software engineers on its rolls.

In the legacy world of Indian IT inhabited by companies like LTIMindtree, people are the products that are monetized. It is evident in industry association and lobby group NASSCOM’s stress on headcount numbers in its latest sector forecast.

It is a flawed metric. In the age of AI, companies must embrace innovation, and seek ingenuity. Unfortunately, standardized assessments may not be the best way of unearthing it.