The chief executive of Hexaware Technologies says AI could cut the cost of IT projects by roughly 25%. If that claim holds up, it could force the IT services industry to rethink how it prices work and where it makes its money.
Why the 25% figure matters
That number isn't just a marketing line. For decades, IT services firms have built their business models around billable hours and skilled labor. A quarter reduction in project costs would break that logic. The savings wouldn't come from one small step, but from many: automated code generation, smarter testing, and project management tools that handle tasks previously done by entire teams.
If a 25% cut is realistic, the companies that adopt AI early could undercut their rivals on price. The ones that lag behind will be stuck with cost structures that suddenly look bloated.
The cost structure shift
This is more than a tweak. It changes what an IT project spends money on. Today, most of the budget goes to people. With AI, the cost moves toward software licenses, cloud capacity, and the infrastructure needed to run automated systems.
That's a different kind of business. It's less about how many engineers you can put on a team and more about how well you can build and reuse AI-powered tools. For clients, the promise is cheaper projects. For providers, the risk is that their old way of charging stops making sense.
Pricing pressures and margin
Here's the catch. If AI really does shave 25% off costs, clients will expect to see some of that in the invoice. But if every firm does the same thing, the savings might just end up as a price war. The facts show firms are being pushed to balance productivity gains with pricing strategies to keep their margins intact.
The real question isn't whether AI can do the work. It's whether the savings stay with the client or with the service provider. Hexaware hasn't said how it will apply its own 25% cost reduction to its contracts. That silence is telling.
For now, the company's claim opens up more questions than it answers. The industry's pricing models were built for a world that may not exist if this 25% holds. How clients respond to the next negotiation will be the first sign of where things are heading.
