Software companies have spent years expanding from one use case to the next, turning focused tools for sales, marketing and customer service into broad enterprise platforms. But in a market increasingly shaped by AI, former Genpact CEO Tiger Tyagarajan says the next stage may depend less on adding features and more on taking responsibility for the work those tools are meant to complete.
That was the central issue in Newsweek’s latest “AI Impact Forum” webinar, “Will Today’s Software Companies Be Tomorrow’s Services Companies?” in which our host, Dr. Ranjit Tinaikar, spoke with Tyagarajan, now a senior advisor and board member across technology, services, private equity and venture capital. In their hourlong conversation, the two discussed how AI is changing the way software and services companies build, sell and deliver work.
Tyagarajan linked the divide to how software companies have traditionally defined their role: building products around narrow functions rather than staying close to the full business result.
“Software has approached work as tasks to be solved for,” he said.
The next phase, Tyagarajan argued, is less about automating individual functions and more about managing the full result those functions are meant to produce.
“No longer am I going to buy tasks, I want to buy work,” Tyagarajan told Tinaikar.
The operating question then becomes harder to separate from the product question. Many software companies have historically kept services at a distance, relying on partners to implement and support their platforms—a structure that helped protect higher-margin software businesses. As AI compresses timelines and accelerates feedback loops, maintaining that separation becomes more difficult.
“The moment that changes to rapid, you need to bring it closer,” Tyagarajan said.
In practice, that means software providers may need to operate closer to the environments where their systems are deployed, integrating services more directly into how products evolve. The focus moves from delivering functionality to ensuring that functionality performs reliably inside a customer’s business.
As software companies move from selling tools for specific functions to managing broader work, customers may expect them to stand behind the result, not just provide the technology.
“For the first time, software companies have to start promising outcomes,”Tyagarajan said. “AI is probabilistic. It’s not deterministic.”
This changes what customers need from vendors after a system is deployed. Delivering results from AI-enabled systems requires ongoing oversight—governance, supervision and quality control—which makes it harder to treat services as an afterthought. Services become part of the product experience, not a handoff after the software is sold.
Tyagarajan pointed to Palantir as one example of a model built around that logic, with software and services packaged together rather than treated as separate businesses.
“No one says segregate it, because you can’t,” he said. “The world we are entering now is very difficult to segregate and you shouldn’t segregate.”
For software and services companies alike, the pressure is not only technological. AI-driven delivery often reduces the amount of labor required to complete a given task, creating tension with pricing models built around time or headcount. Tyagarajan said companies may need to accept near-term disruption to build businesses better suited to the next phase of the market.
“I am going to cannibalize my revenue because I love it,” he said. “Why? Because I’m going to add so much more value.”
That mindset may create short-term disruption, but Tyagarajan argued that companies willing to make the trade-off can position themselves to capture greater long-term value by delivering outcomes more efficiently and at greater scale.
The competitive landscape is also becoming more fluid. Software providers, services firms and AI-native startups are all moving into overlapping territory: product development, implementation, workflow management and outcome delivery. Tinaikar summarized the result as a direct collision between categories.
“The boundaries between software and services companies are blurring and they’re going to fight with each other,” Tinaikar said.
In that environment, success may depend less on where a company starts and more on how quickly it can adjust. Tyagarajan pointed to cultural factors—such as speed of learning and the ability to absorb new technologies—as critical differentiators.
“If you can demonstrate that you are incredibly adaptable…you’re going to always win,” he said.
That sort of adaptability also shapes how organizations gather and act on information. Both speakers emphasized the need for faster, more direct channels between customers and product teams, arguing that traditional methods such as surveys or periodic reviews move too slowly for the current environment.
Instead, companies need more direct, continuous insight into how customers use their products, where workflows break down and what should inform future product decisions.
“The product market feedback loop…is right there,” Tinaikar said.
Those signals, both speakers suggested, are becoming central to how companies decide what to build, how to deliver it and how quickly they need to change.
“Every industry…is facing what I would call a fork in the road,” Tyagarajan said. “Am I going to embrace this change and get the benefit of the change…or am I going to resist it?”
For more on how AI is reshaping the relationship between software and services, watch Newsweek’s recent “AI Impact Forum” webinar discussion with Tiger Tyagarajan above.
You can also sign up for the next “AI Impact Forum” webinar, “The Trillion-Dollar Question: Who Wins and Who Loses in the Services Economy?” That session takes place on May 28 and will feature Noshir Kaka, senior partner at McKinsey & Company.
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