Background – 1
The growth of SaaS (software as a service) has been one of the big stories of the past 10+ years. A few weeks ago, I discussed how Indian SaaS companies could offer Bundled Kaizen Services to gain an advantage over their US counterparts. A few months ago, I discussed how “Profishare” could become a new business model for enterprise. In this series, I will add another angle: AI-driven autonomous agents. Taken together, they herald a new era for SaaS – one which goes beyond just providing software from the cloud.
**
Two X threads by Manav Shah set the foundation. The first thread discusses how Indian IT services could be disrupted:
- India exports a combined $250B of software a year. Out of which over $240B is pure play IT Services (well it’s a lot more than just ‘IT’ or ‘Services’)
- For the past 50 years, business & IT outsourcing has primarily been focused on staff augmentation & increasing the total number of human hours billed. While this was massively successful; we feel that with the advent of generative AI, and everything that gets unlocked with it; the broader outsourcing space across IT & BPOs will get disrupted.
- We have an entire industry of $240B+ to help large scale enterprises realize value/ get a return on their software procurement purchase & broader digital relevance.
- The needs of an enterprise are super nuanced, and things like regional nuances, taxes, returns, policies all need to be baked in and hence you need a specialized provider who can take these tools and more and deliver a fully baked solution on the other end. And this is where the industry comes in.
- The pace at which enterprises have been trying to implement AI is even faster than cloud, and the skill required to do so is not as simple, leaving a small sliver for a new entrant to get in and create a large scale business.
- The biggest change we feel is going to be a tectonic shift from selling services, to selling work & outcomes. We see a huge potential for new entrants that are focusing on leveraging product & AI to deliver outcomes across industries & across service lines.
This graphic by Manav show the opportunity for IT Services:
The second thread builds on this thinking:
- Up until now, we have been looking at our world of B2B software as a split of software and services. And we feel this is where the largest shift lies.
- I think what the future holds is going to be fundamentally different, an amalgamation of software + services + AI agents Companies that will focus on selling outcomes & not just one piece of the puzzle.
- This change is being unlocked, like all previous changes, by a massive infrastructural push. Historically all customer level changes have been powered by huge transformations at the underlying infrastructure level We believe that Foundational models are the biggest infrastructure shift we have ever seen.
- As a consequence we might also see a shift from a traditional seat based/ usage based/ billing man-hours, to selling outcomes & work.
