Davos 2024: AI is having fundamental impact on the business models of IT services companies: Francisco D’Souza

Francisco D'Souza at WEF in Davos

IT industry veteran and former Cognizant CEO Francisco D’Souza said that the seminal shift that artificial intelligence (AI) has brought is going to fundamentally change the IT services industries, especially at a time when the macroeconomic conditions too aren’t in favour of the industry.

D’Souza who is the co-founder and managing partner of private equity firm Recognize, believes that the current times are an important period for the IT services sector with three different things coming together. This includes the ongoing macro cycle and the year 2023, where IT companies weren’t able to grow at their historical pace; the technological shift created by the AI boom and third, the fundamental shift in business models of IT companies AI will bring.

“Whenever there's a big technology shift…there are some winners and some losers in IT services. Those who lean forward and figure out how to capitalize on this new technology on behalf of their customers tend to win (market) share, and those who don't move fast enough tend to lose. So that's, that's going on right now,” he told Moneycontrol in an interview at the World Economic Forum in Davos.

He added, “AI may be one of the first technologies in a long time that's having a fundamental impact on the business model of an IT services company. As you infuse AI into IT services, developers become more productive, your back office becomes more efficient, and so on. Now you have to change your business model.”

When asked if with the impact of AI, IT companies will continue to be the biggest employer, D’Souza said that the bigger picture is, that 10 years from now, the world is going to be far more technology-intensive, far more technology-embedded in everything around us.

“To do that, as much as AI is going to drive productivity, there's going to be a certain amount of that needs to be driven by smart technologists, and that's going to drive employment growth, labour, and hiring,” he said.

He added, “I think over the long term, it's (IT sector) still a great creator of jobs and a great place for people to be and build their careers.”