India | Computer Services & IT Consulting
AI and the Future of IT Services: A Practitioner's View
Equity Research September 13, 2026
Our Expert Insights with Shorthills AI, an AI-focused IT services firm, suggest AI is driving the biggest reset in software/IT services in decades, shifting the industry from geo-arbitrage to intelligence-arbitrage. Productivity gains of 25-75% may delink revenue from headcount, accelerate outcome-based pricing and flatten workforce pyramids. As enterprises scale AI, competitive edge will shift towards AI orchestration, domain expertise and delivering outcomes.
Experts:
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Pawan Prabhat
Co-founder, Shorthills AI -
Paramdeep Singh
Co-founder, Shorthills AI -
Lakshay Hooda
Manager, Shorthills AI
What's Inside
Five ideas shaping software, services and the AI-native enterprise
01 AI-NATIVE ENGINEERING
The future of software development
02 INTELLIGENCE ARBITRAGE
The new economics of IT services
03 ENTERPRISE AI ADOPTION
Insights from Shorthills' client experience
04 FROM PROVIDER TO PRACTITIONER
How Shorthills is reinventing itself with AI
05 THE FUTURE WORKFORCE
AIVA, productivity and diamond-shaped organizations
A brief history of software development and impact of AI:
Software development has continually evolved, from waterfall to agile, from on-premise infrastructure to the cloud, and now from human-led coding to AI-native engineering. Each wave has reduced friction, accelerated delivery cycles, and lowered the cost of building software. The pandemic further accelerated this transition, compelling enterprises to adopt distributed development, infrastructure automation, and digital-first operating models. AI represents the next inflection, fundamentally reshaping how software is designed, built, tested, and maintained.
IT Services - From geo-arbitrage to intelligence-arbitrage:
AI is shifting the foundation of IT Services/BPOs from geo-arbitrage (as cost of agent is the same in any region) to intelligence arbitrage - the difference between cost of humans and AI agents. Intelligent agents are automating software development, analytics and customer support driving productivity benefits from 25% to 75% in some cases. This is reshaping pricing from billable hours to outcomes and breaking the relationship between revenue and headcount in the process. Ability to orchestrate AI, embed domain expertise and deliver business outcomes will be competitive edges in IT Services instead of workforce size.
Enterprise AI adoption from Shorthills' lens:
Enterprises are rapidly moving from pilots to production-grade AI deployments that improve productivity, reduce costs and enhance decision-making. Large enterprises are more open in evaluating newer IT vendors for AI-related services. Areas with large volumes of training data and low hallucination, such as software development, content creation, translation, and Customer support, are more suited for Enterprise AI adoption. Areas such as clinical diagnosis, regulatory submissions in pharma where volume of training data is less may see delayed adoption.
From AI Provider to AI Practitioner:
Beyond helping enterprises adopt AI, Shorthills AI has also leveraged AI to optimize its own operating model. The company has replaced select third-party SaaS tools with internally built solutions driving savings of upto 60% on license fee. Shorthills AI has started to cut hiring of fresh graduates and is shifting engineers from writing code to orchestrating AI-assisted workflows. Its experience suggests that the real value of AI lies in transforming how organizations operate and allocate talent accordingly.
Redesigning business metrics for AI era:
AI is making software development more productive, but measuring this productivity gain is becoming increasingly difficult with each metric having its own shortcoming. To address this, Shorthills AI has built an internal AI-SDLC dashboard that tracks AI usage, token spend, code output and delivery metrics in real time. This will eventually feed into its proprietary framework AIVA (AI Value Added) that measures whether AI-driven productivity gains exceed the costs of tokens, licenses and human review. As AI takes over an increasing share of routine development work, Shorthills expects IT Services to evolve from a traditional pyramid structure to a diamond-shaped workforce model, with fewer junior engineers and greater reliance on experienced professionals.
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* Jefferies India Private Limited
