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The traditional time-and-materials outsourcing model is becoming less relevant as enterprises increasingly shift technology spending towards artificial intelligence solutions they can directly control, according to 8090 Co-founder and CEO Chamath Palihapitiya.
In a post on X, Palihapitiya said the shift is reflected in Infosys' recent decision to lower its revenue forecast, arguing that enterprises are moving budgets away from outsourced engineering hours and towards AI-driven software development. "Infosys cut its revenue forecast this week. The reason it gave is that enterprises are moving their budgets out of outsourced hours and into AI they can control," Palihapitiya said. He said the outsourcing model has traditionally been built around billing clients by the hour, a model that benefits when software development remains manual and time-intensive. "The outsourcing model was built on billing by the hour, which only grows when the work stays slow and manual. So when businesses can, instead, build something in weeks/months and watch exactly what it does, the business model of time and materials stops making sense," he said. Palihapitiya added that large regulated enterprises with stringent quality and precision requirements are increasingly adopting AI-led software development to modernise legacy systems. "Large regulated enterprises that have high demands on precision and quality are using 8090's team and our Software Factory to help rewrite years of old code and eliminate billions of dollars of sunk cost with it," he said. Last month, AI-native software company 8090 announced it had raised USD 135 million in a Series A funding round led by Salesforce Ventures, with participation from WNDR, Craft Ventures, The Production Board, LAUNCH and several angel investors. 8090's flagship product, Software Factory, is an AI-native software development platform designed for enterprise customers. The platform brings together engineers and AI agents in a single environment to design, build, modernise and maintain enterprise software while providing visibility, governance and auditability across the entire software development lifecycle. The company says it primarily serves highly regulated industries including healthcare, financial services, manufacturing and government. (ANI)
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