Emerging industries often present a great investment opportunity. There are industries that will die in the future and new ones will emerge. Your task as a successful long-term investor is to identify these changing trends, and then put your money on the emerging ones. The good news is that these big changes or shifts are often gradual and visible, and you can make money off them.
We have spotted five big shifts happening right now. In this article, we discuss the first one.
There is a marked shift happening in industries worldwide and in India as well. Repetitive, low-level jobs are being automated. This shift is going to affect manufacturing, construction, retail and wholesale trade, healthcare, accommodation and food services in India, says a McKinsey report. These are also industries that will benefit most from increased automation over the next decade.
Why is this shift happening?
The old way of working on every business process manually is proving inefficient, wasteful and unprofitable. Growing use of technology, automation and artificial intelligence (AI) is changing the old way of running things.
Signs of this shift on the ground
Agriculture: The prospect of driverless tractors is close to becoming a reality, with both M&M and Escorts working on them. These driverless tractors will use GPS systems to geo-fence farms, plough the fields and even plant seeds. The recent trend of hiring tractors instead of buying them outright is likely to see driverless tractors come to smaller farms sooner than we expect.
Infrastructure management: Automation and AI are increasingly being deployed in infrastructure projects. The Indian Railways, for instance, is using automation and AI to monitor trains, flag glitches and anticipate problems. The development of smart grids and smart cities again falls on the adoption of AI to build these future-ready infrastructures.
Automobiles: Automation and robotics have made their way into the auto industry as well. India's largest passenger-car manufacturer Maruti Suzuki has one robot for every four workers and operates around 5,000 robots at its plants in Manesar and Gurgaon.
Technology: Technology companies are using automation and AI to solve client problems. Infosys automated a client's customer engagement to bring down customer-query resolution time from 20 hours to less than five minutes. Wipro generated 8,000 people-equivalent productivity hours using automation last year.
In infrastructure and industrial automation, the key beneficiaries include ABB, Siemens and Schneider Electric. All three are global players in the field of automation and AI and work on many of the large infrastructure projects announced in the country.
ABB straddles a wide range of products and services, which include industry automation, robotics, solar energy, railway, smart grids and smart cities. Schneider Electric, too, is in the business of energy and industrial automation. It recently acquired L&T's electrical and automation (E&A) division for Rs14,000 crore. Siemens India specialises in industrial automation. It recently opened four facilities in the country, one each in Pune and Noida and two in Gurgaon, focusing on cloud-based operating systems that will connect products, plants, systems and machines with advanced analytics capabilities.
In automobiles, Maruti Suzuki is likely to be one of the biggest gainers by virtue of its size and lead in automation.
Technology companies, like Infosys, Wipro and L&T Technology Services, implementing automation and AI stand to gain in the shift towards greater automation.
For the other stories in this series, click on the links below.