For years, large companies have been paying heavily for software licences, platforms that manage workflows, approvals and operations. The costs run into millions every year. Most companies never questioned it because there was no alternative. Now there is.
AI agents are small, focused programs that can handle the same tasks that traditional software platforms do, but without the recurring licence cost. Enterprises are beginning to experiment, and early results are hard to ignore. In some cases, companies have managed to cut software costs
Not A Replacement, A Transition
This is not about AI wiping out existing technology overnight. Large organisations have complex systems built over many years, and moving away from them takes time. Smaller companies with less history will move faster. Presently AI is seen more as collaborative tool, tool that helps SAAS players vs replacements to IT companies
The IT services industry is not disappearing either. It is changing shape. AI is actually opening doors into sectors that IT firms were previously locked out of; legal, healthcare, finance as the domain knowledge these industries need is now accessible through AI in a simple way vs earlier
Everyone Is Making Their Move
India's largest IT firms have been working towards the AI shift over years. TCS has deepened its partnership with Google Cloud to push AI into enterprise operations, while Infosys has tied up with Microsoft to scale AI adoption across its client base earlier. Currently, we see Infosys partnering with Anthropic to expand enterprise AI.
Hexaware is doing two things at once, launching a Zero License service that helps enterprises exit expensive SaaS contracts and rebuild on AI agents, and partnering with Replit to bring AI-powered rapid application development to large businesses.
Road Ahead
The IT and technology services industry is expected to evolve meaningfully as Gen‑AI begins by compressing revenues in the near term before eventually expanding them, driven by productivity gains and new solution architectures. An inflection point will likely emerge once enterprises shift from limited pilot programs to full‑scale deployments, unlocking broader demand and deeper integration across business functions.
As this transition accelerates, the traditional headcount‑based billing model could increasingly give way to outcome‑based commercial structures, better aligned with AI‑driven efficiency and value delivery. With these structural shifts, the total addressable market (TAM) for Indian IT services holds the potential to expand significantly to nearly $300-400 billion by 2030, supported by rising global adoption of AI-enabled transformation.
While short‑term volatility may persist due to evolving business models and investment cycles, the medium‑ to long‑term outlook remains strongly positive as per analyst.
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