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AI-powered coding agents are beginning to alter corporate technology spending, with companies increasingly choosing to build software internally rather than purchase products from vendors, according to a research report by McKinsey.
Nearly one-third (32 per cent) of respondents said their organisations had decided against purchasing at least one software product or feature because they could build the functionality internally using agentic coding tools. The trend was particularly pronounced in technology and healthcare, followed by professional services and energy and materials. The shift comes as enterprises rapidly scale agentic AI. Forty percent of respondents at organisations with more than $1 billion in annual revenue said they were scaling AI agents in at least one function, up from 27 per cent a year earlier. Adoption among smaller organisations, however, remained broadly unchanged at 22 per cent. AI high performers are moving even faster. They are twice as likely as other organisations to report scaling software coding agents and 2.7 times more likely to scale other agentic AI. Nearly half of high performers said they had forgone software purchases in favour of building internally, compared with 31 per cent of other respondents. At the same time, the economics of AI are becoming more important. Around one in five organisations said AI-related operating costs, including token costs, had constrained their use of the technology. Yet investment appetite remains strong, with 60 per cent of respondents expecting their organisations to increase AI investment over the next year. The trend could increasingly force technology companies to rethink the traditional software buy model, particularly as coding agents become more capable. McKinsey noted that leading organisations are becoming more deliberate about where to buy, where to build and where to develop internal capabilities. The report also suggests that AIs cost structure will become an increasingly important consideration. As agentic systems perform more complex tasks, companies will need to balance the savings from replacing purchased software with the costs of compute, tokens and internal development. (ANI)
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