Riding horses and tigers is different

The rapid rise of large language model platforms—Anthropic, OpenAI, Google Gemini—has put the global IT services model in serious jeopardy of becoming obsolete. Dramatic as that sounds, I believe it is precisely the right framing. 

Since January 20th through the last week of February, shares of virtually every major global IT services company have dropped between 20 and 30 percent. Accenture was down roughly 30 percent. IBM was down 24% with a single-day 13% decline around February 23rd-24th. Wipro and Coforge shed nearly 25 percent. TCS, Infosys and HCL Tech are all trading at multi-year lows.

The only comparable sector decline in such a compressed window was COVID-era 2020—except that time, the Dow Jones fell 39 percent alongside them. This time, the Dow was essentially flat.

The broader economy was not in crisis. It’s the IT services business model that the market is repricing—and it is signalling a seismic shift. The US-Israel-Iran war has broken out since this piece was conceived, affecting larger economic forecasts, but we will stick to the impact of AI specifically on the software consulting services business model.

Riding the Horse: A 35-Year Playbook

AI impacting traditional revenue models built around human capital seems to be the central story for this collapse. However, nearly every major IT services firm has announced an AI partnership. Accenture joined OpenAI’s Frontier Alliance alongside McKinsey, BCG, and Capgemini. TCS, Infosys, and Wipro all have deals with Anthropic, OpenAI, or Google. In previous cycles, announcements like these would lift a company’s stock for weeks. This time, Accenture’s shares fell 6.6 percent on the very day it announced its OpenAI partnership. The market is not buying the story.

The 35-year IT services playbook used to be: announce a partnership with the rising platform, stand up a competency centre, train people, and use the partner’s brand to win enterprise contracts. SAP and Oracle in the ’90s for ERP implementation. Salesforce in the 2000s for SaaS-led services. AWS, Azure, and Google Cloud in the 2010s for Cloud migration. Each time, the software platforms made clear that services were not their business. They left the gap open. Services firms filled it and built empires. I call this “mount the horse and ride.” We did exactly this at Imaginea—the technology services company I co-founded under Pramati, later acquired by Accenture. Pick the fastest horse early enough, and you win. 

Not anymore.

AI Is Different. You’re Riding a Tiger.

In every previous cycle, technologyvendors needed IT services companies. But AI does not need implementers in the same way—it is the product and service rolled into one. When Claude Code can automate COBOL modernisation, and when the CEOs of Anthropic and OpenAI publicly state that software engineering roles will largely disappear within three years, they are not describing disruption. They are describing replacement. Horses make the riders winners. The tiger turns on you eventually.

Jefferies just downgraded TCS, Infosys, HCL Technologies, and three other major IT firms, explicitly citing AI as a structural threat to the business mix. JP Morgan warned that clients will reallocate spending as AI-led efficiencies shrink demand for managed services. This is now the mainstream analytical consensus—not a fringe view.

Build the Moat or Become Irrelevant

The answer is not another partnership announcement. The era of scaling revenue by scaling headcount is over. The firms that survive will use their deep domain expertise—the genuine understanding of how enterprises work—to build proprietary software assets. Products that clients cannot simply replace with a prompt. Use AI to build at an extraordinary velocity, but build something that is yours. The most pragmatic path may be acquisition: seed a product culture with companies that already have it and play the game with your software, not just your services.

It’s do-or-die time for IT services.

About the author

"Vijay Pullur a serial tech entrepreneur with a two-decade track record covering web infrastructure to cloud, social, mobile and now agentic AI platforms. As co-founder of Pramati ("exceptional minds"), a globally unique software incubator, Vijay has seeded and grown multiple software ventures, with exits to the likes of Autodesk, Accenture and UKG. Vijay is currently CEO and Cofounder at WaveMaker. He thrives on mentoring other entrepreneurs, discovering and nurturing exceptional talent and developing deep associations that foster long-term success."