The Affordability Dividend
What happens to a market when its product suddenly costs one-tenth as much? The instinctive answer — the market shrinks to a tenth of its revenue — has been wrong every time in economic history. When the steam engine made coal-powered work cheaper, coal consumption exploded; economists call it the Jevons effect. Cheaper computing did not reduce the market for computing; it put computers into offices, homes, pockets, cars, factories and appliances. Cheaper communication expanded from occasional long-distance calls into continuous messaging, video and data. Cheaper manufactured goods did not merely save money for existing consumers — they created new classes of consumers altogether. Cheaper software will not mean a smaller software industry. It will mean software used by ten times as many businesses, for ten times as many jobs.
Because the greatest effect of the foundry will not be on the businesses that switch. It will be on the businesses that start. Today a large enterprise may run hundreds of software products; a small company a handful; a local business almost none beyond basic accounting and messaging. That difference is not explained by need. Small organisations also have customers to manage, work to coordinate, employees to support, decisions to make and data to understand. They are simply priced out — over-served by enterprise suites built for companies a hundred times their size. At one-tenth of today’s price, the addressable market changes shape, and the relevant question is no longer how much revenue moves from expensive software to cheaper software. It becomes: how many businesses will use serious software for the first time?
Five layers of the dividend
The affordability dividend arrives in layers. Direct savings: existing customers cut the cost of common software and redirect the money towards people, products or growth. Wider adoption: businesses previously priced out begin to use sophisticated tools. Specialisation: when software is cheap to produce, smaller professions, industries and workflows get products designed specifically for them — the market no longer needs millions of potential users before an application makes economic sense. Experimentation: a company can try a new process without a large contract or a multi-year implementation, and more experiments mean more learning. Local adaptation: affordable software can be built for different languages, regulations and business practices, rather than forcing every customer into a product designed for the world’s largest companies.
Follow those layers far enough and the software foundry stops being a software-industry thesis and becomes an economic-development thesis. The school managing admissions on a spreadsheet gets an admissions system. The clinic scheduling patients through a messaging group gets patient workflows. The twenty-person manufacturer gets production planning; the retailer gets inventory intelligence; the professional firm automates its repetitive operations. Each improvement is modest. Across millions of businesses that largely missed every earlier wave of digitisation, the aggregate is not. A business should not need to become large before it deserves excellent technology — any more than a patient should need to be rich before deserving effective medicine. Software is becoming infrastructure, and infrastructure is judged by who it reaches.
Every product makes the next one cheaper; every price cut makes the market larger.
The two worlds of software
None of this means all software converges to a tenth of its price. When creation becomes abundant, value does not vanish — it moves. Some software will remain expensive for reasons no foundry can touch: network effects, irreplaceable proprietary data, regulatory depth, deep customisation, mission-critical reliability, trust accumulated over decades, outcomes measured and underwritten. That world is safe, and deserves to be. What gets exposed is the vast middle: mature categories with bloated feature sets, thin daily use, per-seat prices long decoupled from cost, and no remaining differentiation except the customer’s fear of leaving. The foundry does not attack the first world. It liberates the second.
Value beyond the code stays protected; price held up by switching cost alone gets exposed.
India’s product moment
And there is a particular opportunity here for India — perhaps the largest since the services revolution itself. Indian IT gave the country revenue, employment and global credibility, but it never gave India products: the model sold engineering hours, and the intellectual property stayed with the client. There was a good reason. Building software products used to be a craft-intensive, capital-intensive game — the Valley’s game, requiring dense pools of elite product talent and patient venture capital. The foundry changes the nature of the game: product-building becomes process-intensive and cost-intensive — and process and cost are precisely the games India has spent forty years winning.
Consider what the foundry needs. The hardest part of useful business software was never the screen or the database function. It is knowing how organisations work: where the data comes from, which approvals matter, which exceptions break the process, why implementations fail, what users do when the official workflow jams. India’s technology industry has spent decades — and a million enterprise projects — acquiring exactly that knowledge, and until now could only rent it out by the hour. AI creates the way to productise it. A small team can combine domain knowledge, coding agents and a shared production system to build software for a worldwide market — designed for affordability from the beginning, rather than built for wealthy enterprises and cut down for everyone else. It is the transition from exporting hours to exporting products — and it can draw on both of India’s great traditions at once: the process discipline of its services industry and the affordability ambition of its pharmaceutical industry. China became the factory of the physical world. India can become the foundry of the software world.
The opportunity is not automatic. AI-generated software can just as easily produce a flood of brittle, insecure, unmaintained products — cheap creation without quality discipline raises customer cost rather than lowering it, and the last ten per cent of engineering (reliability, security, migration, edge cases, long-term maintenance) may remain the hardest part. So the foundry must reject the idea that speed alone is the revolution. The real objective is trusted affordability: software that is inexpensive because its production and operating systems are structurally more efficient — not because quality, security and responsibility have been removed. The best foundries will pair machine speed with human accountability, knowing which parts can be fully automated, which require verification and which must stay under direct human control. Their advantage will not be generating the most code. It will be repeatedly delivering the greatest useful outcome at the lowest sustainable cost.
