R Systems sees AI-native work reshaping revenue mix, coding demand

A significant share of new and existing revenue streams at R Systems now comes from services and products driven by artificial intelligence (AI) or built natively using AI, rather than traditional coding work such as programming, debugging and testing, Managing Director and Chief Executive Officer Nitesh Bansal told Business Standard.

In an exclusive interaction, Bansal said revenue from traditional engineering services — long a mainstay of several Indian IT companies — would eventually decline as more products and services shift towards AI-native models.

“What does being AI-first mean? It is about reimagining business from an AI perspective. Today, for most companies, almost 70 to 80% of their cost is people who are writing the software. If you are simply replacing programmers with AI, but still releasing the same number of features with the same kind of release velocity, then you are not getting the benefit,” Bansal said.

He said companies need to rethink how software is built and delivered rather than use AI merely as a substitute for existing programming work.

Bansal, a chartered accountant by training who spent more than two decades at Infosys before taking over the top job at R Systems International, said the value of AI in services should be measured by its impact on both accuracy and productivity.

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“For example, in the US, electricians need to be certified for the kind of electrical work that they do. So you just can not call up anybody asking for something to be fixed. It has to be based on the power rating and the electrician's certification. For them, AI will become meaningful if they can do eight service calls a day, instead of four,” he said.

The same principle, he added, applies to professional services, where AI should help employees complete more work in less time while improving the quality of the outcome.

R Systems was founded in 1993 by Satinder Singh Rekhi and was acquired by Blackstone following a deal announced in November 2022. The acquisition was completed in April 2023.

Bansal said one of the main factors that attracted the private equity firm was R Systems’ ability to retain customers despite operating in a highly project-oriented business.

“It is not a long-term support services-oriented business, but your customers have stayed for a long time. That means you really delivered on their expectations, which proves your delivery quality; that you have talent that has been retained and has stayed with you, which means you're at least running things well,” he said.

“Being publicly listed also provides a certain amount of assurance that things are being managed well; it's a well-run, well-operated company,” Bansal added.

The company has also made changes to its hiring strategy and has resumed recruiting freshers, Bansal said.

He said many college graduates entering the workforce over the past couple of years are “AI-native” and often find it easier to work with AI systems than some more experienced employees.

The shift is changing the skill mix companies look for as AI becomes embedded more deeply in software development and service delivery.