The Great Reset: AI Revolution Disrupting Enterprise SaaS And IT/BPO Services

The Great Reset: AI Revolution Disrupting Enterprise SaaS And IT/BPO Services

SUMMARY

Rise of generative AI (GenAI) and agentic models is disrupting the traditional model followed by enterprise software procurement and IT service

With the rapid development of AI technologies, especially GenAI, the threshold for creating custom solutions has drastically dropped

AI-driven agents empower enterprises to automate workflows without reliance on traditional SaaS providers or IT/BPO services for customisation and implementation.

“People who work in process-related industries, which we traditionally used to call BPO, fear the risk of getting replaced with an AI engine pretty quickly,” said Rajesh Nambiar, chairman of Nasscom, and chairman and managing director of Cognizant’s India unit. 

This statement captures the urgency of what’s unfolding across the enterprise software and IT service landscape. For over two decades, global businesses have followed a well-established playbook when it comes to enterprise software procurement and IT service implementation.

This playbook involves selecting large-scale software or SaaS vendors like SAP, Oracle, Salesforce, and Workday to address various business needs, followed by choosing IT services providers, such as Infosys, TCS, Accenture, or Wipro, for implementation, customisation, and support. 

Business Process Outsourcing (BPO) providers would then operate these systems to deliver specific functions like customer service, accounts receivable/payable, and procurement.

This system provided immense value, enabling businesses to manage, automate, and improve their processes, while creating massive employment opportunities and returns for investors in both software and IT/BPO services sectors.

But the rise of generative AI (GenAI) and agentic models is disrupting this traditional model, leading us toward what we might call “The Great Reset” of the enterprise technology landscape.

This “Great Reset builds on the trends explored in Inc42’s report AI-powered Vertical SaaS. There, the author explores how AI-driven, industry-specific solutions are overtaking generic SaaS by delivering tailored outcomes. Now, we look beyond SaaS to see how this disruption is reshaping the broader landscape of enterprise technology, including the IT and BPO services sectors.

This article delves into how agentic systems leveraging GenAI and autonomous “AI employees” are fundamentally altering workflows, value chains, and the very structure of enterprise service delivery.

A System Under Strain: The Traditional Enterprise Model

Since the early 2000s, the integrated ecosystem of SaaS vendors and IT/BPO service providers has transformed how enterprises operate:

  • Cost Efficiency: With standardised software and pre-built solutions, businesses no longer needed custom-built software developed from scratch—a costly and time-intensive process.
  • Scalability: SaaS vendors provided broad, adaptable solutions that could be implemented across large-scale organisations, and IT/BPO services enabled these solutions to be scaled, customised, and supported globally.
  • Operational Efficiency: BPO services companies could operate standardised software for business processes at scale, optimising workflows for customer service, procurement, HR, and other functions.

This model created a win-win environment, where SaaS companies, IT/BPO services providers, and global enterprises thrived on a cycle of software procurement, implementation, and support.

AI-Driven Disruption: A New Paradigm For Customisation And Automation

With the rapid development of AI technologies, especially GenAI, the threshold for creating custom solutions has drastically dropped. Today, organisations can leverage AI-native tools to develop bespoke software at a fraction of the time and cost.

GenAI, coupled with agentic models — AI-driven agents that can independently carry out tasks — empowers enterprises to automate workflows without reliance on traditional SaaS providers or IT/BPO services for customisation and implementation.

Here are key factors reshaping the landscape:

  1. Dramatic Productivity Boosts in Software Development: GenAI models and AI-assisted coding tools accelerate software development, making it easier for organisations to develop custom applications tailored to their specific needs.
  2. AI Employees in Action: Agentic models, often referred to as “AI employees,” can automate a range of tasks independently. This removes the need for traditional, human-operated BPO services for certain functions, leading to substantial cost savings and efficiency gains.
  3. Reduced Time and Cost of Custom Software: Today, building custom AI-powered software is not only faster but significantly more affordable, allowing organisations to replace standard SaaS solutions with more targeted, efficient AI-native software. Klarna’s pivot from Salesforce and Workday to a homegrown AI-native system is a prime example of this shift.

The Shifting Landscape: SaaS Giants And IT/BPO Struggling To Adapt

As we discussed in our previous article on AI-powered Vertical SaaS, industries are moving away from one-size-fits-all solutions in favor of tailored, AI-driven approaches that deliver clear outcomes. This shift, however, is not limited to vertical SaaS alone; it signals a broader reset affecting enterprise software and IT/BPO services alike.

To stay competitive, traditional SaaS vendors like Salesforce are pivoting toward AI-based solutions, such as Salesforce’s Agenforce, which reflects an increasing focus on AI-driven automation.

Similarly, IT and BPO services providers are facing stagnant growth and a significant drop in profit margins as AI-native startups and agencies, equipped with highly productive AI-native talent, enter the market.

However, despite their attempts to keep pace with the AI wave, these legacy providers face structural challenges:

  • Long Implementation Cycles: Large enterprises’ reliance on traditional software and customisation cycles limits their ability to adopt AI-based solutions swiftly.
  • Legacy Workforce and Skill Gaps: While IT and BPO companies are rapidly retraining their workforces, AI-native employees in startups have an edge in productivity and innovation, making it hard for traditional providers to compete on quality and speed.
  • Margin Pressures: With new AI solutions directly addressing enterprise needs without relying on intermediaries, profit margins for IT/BPO services are thinning, disrupting a model that has delivered double-digit growth for decades.

The Great Reset: A New Era Of Tech Dominance

Over the next 2–3 years, we are likely to see a significant shake-up across the technology landscape. The disruption being wrought by AI could lead to what we might call “The Great Reset,” where the new winners are those who fully embrace AI-native approaches to software and service delivery.

Companies like Klarna are already demonstrating what this shift looks like in practice. In its first month, Klarna’s AI assistant handled 2.3 million customer service conversations across 35 languages, performing the equivalent work of 700 full-time agents.

By seamlessly integrating AI to automate customer interactions, Klarna has not only reduced costs but also enhanced customer satisfaction, underscoring the competitive advantage for businesses that prioritise AI-driven innovation in their core operations.

Who Will Emerge On Top?

  1. AI-Native Vertical SaaS and Solution Providers: Complex systems, will redefine the future of enterprise technology. By enabling deep customisation and configuration without the constraints of legacy platforms or cumbersome implementation processes, these solution providers position themselves for a significant competitive advantage in the evolving landscape.
  2. New-Age Agencies and Startups: Startups and agile agencies that specialise in delivering tailored, AI-powered solutions are poised to disrupt the dominance of traditional IT and BPO service providers. By leveraging lean, AI-native teams that prioritise innovation, efficiency, and speed, these emerging players can offer cost-effective and highly customised alternatives. Their ability to rapidly adapt to client needs, integrate cutting-edge AI technologies, and bypass the inefficiencies of legacy processes positions them as attractive partners for organisations seeking to modernise and optimise operations. This shift represents a significant market share opportunity, signaling a transformative era for the IT services landscape.
  3. Enterprises adopting Agentic workflows: Organisations that pioneer the development of agentic AI models in-house are set to transform the very foundation of enterprise workflows. These agentic models, driven by their ability to automate complex, end-to-end processes, challenge the traditional reliance on fragmented SaaS solutions and labor-intensive BPO support services. As these intelligent agents streamline operations with minimal human intervention, businesses will increasingly shift from adopting multiple standalone software applications to implementing cohesive, AI-driven ecosystems. This paradigm shift not only enhances efficiency and scalability but also reduces operational complexity, making traditional approaches less relevant. The rise of agentic AI marks a profound evolution in enterprise technology, fundamentally reshaping how organisations approach productivity and process optimisation.

Preparing For the Future – Adapting To Thrive In An AI-Driven World

To emerge as leaders in this new tech world, legacy SaaS and IT/BPO services providers must make decisive shifts in how they leverage AI. Businesses looking to succeed should focus on several key strategies:

  • Demonstrate Domain Depth Companies: These companies with deep domain knowledge have an edge in understanding the nuanced needs of their clients. A detailed grasp of industry-specific workflows, regulations, and operational challenges allows for AI solutions that genuinely add value and align with real-world demands. 
  • Seamless Integration with Existing Systems: Success in the AI landscape depends not just on creating new technologies but on ensuring they work harmoniously within current systems. Companies that excel in integrating AI with existing applications, databases, and workflows—creating a seamless user experience across platforms—will stand out from competitors who overlook this critical need.
  • Marry GenAI with Existing Data and Tools: The real power of GenAI lies in combining it with existing organisational data and tools to generate insights, automate processes, and deliver predictive capabilities that feel native to the business’s existing technology environment. Companies that can effectively bridge the new potential of GenAI with legacy data and APIs will unlock substantial efficiencies and become indispensable to their clients.
  • Build an AI-Ready Workforce: Retraining a massive workforce to meet the demands of AI and GenAI is a considerable challenge. Legacy providers are scrambling to reskill employees in AI-driven development, automation, and data analysis. Given the scale of this transformation, achieving a fully AI-capable workforce won’t be quick or easy, especially with rapidly evolving AI capabilities. TCS has reported working on over 200 engagements in GenAI with clients, likely combining GenAI with existing client data and systems.
  • Strategic Acquisitions for Skill and Tech Enhancement: Given the difficulty of upskilling an entire organisation, many IT/BPO services companies are actively scouting for acquisitions that bring AI talent, domain expertise, and cutting-edge technologies into their fold. This trend is only expected to pick up, as legacy companies look to AI-native startups and agencies to accelerate their transformation and bring AI-enhanced offerings to market more quickly.

For legacy SaaS and IT/BPO services providers, the need to adopt an AI-first approach has never been more urgent. While legacy models have served well for the past two decades, businesses are ready for a new approach that maximises efficiency, automation, and customisation.

As we stand at the brink of the great reset, it’s clear that the old playbook is nearing its end. The pace of AI innovation will push organisations to rethink procurement, workforce strategy, and technology adoption. In this evolving landscape, only those who adapt quickly will remain relevant, marking the dawn of a new era where the true power of AI transforms every aspect of enterprise software and services delivery.

By prioritising domain expertise, seamless integration, and GenAI adaptation, as well as bolstering their AI readiness through strategic acquisitions, established players can improve their chances of thriving in the post-AI disruption era. But the transition will be challenging, and those who hesitate risk being overshadowed by agile competitors and AI-native startups. In the coming years, we expect the race for relevance in the AI-powered world to intensify, bringing about a tectonic shift in the global enterprise technology landscape.

Note: The views and opinions expressed are solely those of the author and does not necessarily reflect the views held by Inc42, its creators or employees. Inc42 is not responsible for the accuracy of any of the information supplied by guest bloggers.

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