Information Technology – Expert Update – Sustaining margins to remain a challenge
Published on 20 Feb 2026
We recently hosted an IT expert to understand the AI impact on labor-intensive revenue models, run by IT services and BPM companies. They anticipate that, sooner or later, revenue models will have to shift to outcome or output-based constructs. Complex areas like platform engineering, AI implementation and agentic deliveries would be more relevant vs. downstream activities, even the ADM service lines would witness a sharp deflationary (30-40%) pressure. As a result, delivering business outcomes becomes less resource-intensive and less dependent on large engineering teams. The IT expert anticipates 20-50% deflationary impact (overall) coming through reducing process complexity and turnaround time. However, large part of this deflationary impact for IT services would be offset by: (1) building AI-ready infrastructure, (2) undertaking model and API development/customization, and (3) creating an agentic automation ecosystem, which are a multi-year consulting and engineering cycle. For BPM companies, in the near term, their revenue might bump up temporarily due to rising AI implementation demand, but sustaining the same would be challenging, as existing automations are replaced by intelligent agentic workflows.
