Telstra taps Indian tech giant Infosys to steer its artificial intelligence transformation

Australia’s biggest telco is axing hundreds of its tech vendors in favour of just two as it streamlines its operations to take advantage of the artificial intelligence boom.

Telstra product and technology group executive Kim Krogh Andersen.

Telstra has asked listed Indian software titan Infosys to automate more of its software engineering capabilities and accelerate its shift from legacy platforms, via artificial intelligence.

The multi-year deal will result in Telstra slashing the number of its main vendors from more than 40 to two, as it looks to automate more tasks across its business and meet its ambitious T25 cost saving goals.

But Telstra product and technology executive Kim Krogh Andersen said the Infosys partnership was not purely about outsourcing, and Telstra aimed to build more internal capability to “own more of its own destiny when it comes to software”.

“We already have more than 70 per cent of the workforce in IT done by partners today. It’s about ensuring that the work is done more efficiently and in a strategic mindset instead of a time and material delivery mindset,” Mr Krogh Andersen told The Australian from Bangalore.

“We still have an ambition to insource more and that’s something we are doing in parallel with consolidating partners.”

Telstra revealed in February that it had achieved about $105m, or 20 per cent, of the savings outlined in its much-hyped T25 strategy. Chief executive Vicki Brady was adamant at the time that the company could deliver most of the remaining $400m in the next 18 months as it ramped up its cost cutting program.

Mr Krogh Andersen said Telstra had more than 40 big vendors and hundreds of smaller ones that were holding the telco back as it sought to provide a more streamlined experience for customers.

“After Covid we realised that on the experience part we don’t compete only with other telcos – we are competing with everyone that has a digital experience and we need to be the best.

The Infosys partnership complements a five-year deal Telstra struck with Cognizant last month. “The overall vision is to remove legacy technology and migrate to a strategic stack across each domain in line with Telstra’s Reference Architecture Model (TRAM),” Cognizant said.

Infosys executive vice-president Anand Swaminathan.

Infosys – which has been gaining more awareness locally after it struck a deal with the Australian Open to become its innovation partners – shares a similar view, saying that telcos need to transform themselves to “tech-cos”, with a strong focus on artificial intelligence.

“AT&T, for example, puts engineering excellence and transformation management at the heart of its operating model.

Software engineers, data scientists, and thousands of citizen developers build enterprise applications that are changing the telco behemoth to an AI-first nimble tech-co,” Infosys says.

“With this operating model in place, AT & T is using generative AI to optimise its networks, upgrade legacy software, enhance contact centres, and upskill employees around the three pillars of human-centricity, responsible AI, and secure/ethical by design.”

But Infosys stresses that telcos need to have “human-centricity at the core”, with AI augmenting rather than replacing employees.

Telstra has already deployed AI across half of its operations as part of its T25 strategy to become fully AI-enabled in coming years. It is using the technology to better detect and fix network faults, rather than engineers poring over lines of code, and to increase efficiency and customer satisfaction across its call centres. The telco’s employees can ask the AI to provide a “one sentence summary” that is gleaned from customer notes and previous interactions, reducing the need for customers to repeat information, avoiding unnecessary frustration.

But Mr Krogh Andersen said he was focusing less on finding new AI use cases and more on the performance of the technology on where it has been deployed.

“This for me, is the year of impact because I want to accelerate faster. You need to show the outcome and that’s how we create more impact.

“We are not efficient enough today and we need to apply AI to do that (lift efficiency). I have found one of the biggest bottlenecks when we do the development is testing and there is no reason why AI cannot automate the most part of testing. That’s an area where we want to accelerate.”

Its partnership with Infosys will involve access to its “AI-first suite of offerings”, including Topaz, and its Cobalt cloud suite. Infosys says this will offer a “robust engineering backbone to simplify the technology landscape and enable Telstra to continue its transformation to become an innovation-led enterprise. In addition, Infosys says it will introduce modern product engineering practices to elevate its customer and employee experience”.

If well executed, Telstra – like other telcos – has an opportunity to regain ground lost to tech giants. Infosys executive vice president Anand Swaminathan said the telecommunications had a similar opportunity with the cloud computing revolution a decade ago but it “did materialise in the way that telcos could have potentially taken it and seized it’.

“But AI is providing a significant opportunity,” Mr Swaminathan said.

“Because if you look at it, one of the semiconductor companies is servicing basically four big customers and they are very keen to directly leapfrog and work with enterprise clients, particularly like the likes of telcos and see if they can provide them an AI infrastructure. So there is another window of opportunity now for the telcos to consider if they can create new pools of revenues because of AI now coming into play and creating new and interesting partnerships.”