AI killed the IT star?

The growing consensus around AI capabilities, especially Agentic AI – systems of autonomous agents capable of performing complex sequences of actions – is that the technology raises difficult questions about the future of the major companies in the IT services industry. At first glance, one might conclude that if a machine can write code, analyze data, propose solutions, and even execute them, then there will be no need for the companies that have traditionally provided these services through manual, complex, labor-intensive work. But as straightforward as this narrative may seem – it actually rests on significant oversimplification.

To understand what’s at stake, we need to recall what IT companies actually do. This is a $1.5 trillion-a-year industry built around providing technology services to organizations. Everything from development, integration, infrastructure, cloud services, cybersecurity, maintenance, technical support, and even technological and strategic consulting falls under this broad umbrella. Some players operate globally with hundreds of thousands of employees; others are more focused and specialize in specific technologies or sectors. No matter their size, it’s important to remember that these are the companies building the digital infrastructure organizations rely on today.

Maayan Shahar.

The rise of accessible, powerful, and affordable AI tools may disrupt this industry - but eliminate it? There’s not a chance. What we’re witnessing is closer to accelerated evolution than to collapse. AI doesn’t signal the end of the IT industry; rather it marks the moment when it must undergo a rapid but necessary transformation.

For decades, many companies have relied on a “human in the loop” model - large workforces handling integration, analysis, maintenance, and support. This model has often relied on development or service centers in emerging markets. But when autonomous tools can perform much of this work more accurately, more quickly, and at lower cost, the foundation of the business model begins to shake and many workers could find themselves at risk.

This is unquestionably a challenge - but it is also an opportunity. The more AI advances, the more apparent the critical role of IT companies becomes. Global organizations face massive information and data challenges, and even when an AI solution exists, implementing it in a way that creates real value is far from straightforward. Accordingly, failure rates in AI deployments remain high. The challenge has shifted from being purely technological to one of integration, regulation, and cultural alignment. No algorithm can replace the human know-how gained through deep organizational understanding, experience with long-term projects, and the ability to bridge domains. These are precisely the strengths IT companies inherently possess.

It’s also important to remember that not every customer wants an off-the-shelf solution. Some organizations - particularly those in heavily regulated sectors like finance, healthcare, and government - prefer to build solutions internally, maintaining full control over intellectual property, data, and security. In these fields, IT companies will remain essential. But this isn’t just a matter of preference, sometimes regulators explicitly require it.

This is why we are now seeing movement on three fronts:

• IT companies are building AI-based platforms for their clients, leveraging their intimate understanding of the organization.
• They are partnering with emerging AI companies that bring clear, differentiated value.
• We are witnessing a wave of strategic acquisitions - whether of AI products, new capabilities, or dedicated teams.

Of course, the ongoing shift is still being felt. It’s undeniable that AI reduces the need for manpower - but that doesn’t mean the industry is shrinking; instead it is reshaping itself. Repetitive development work is declining, but demand is rising for engineers who can design smart architectures, understand business contexts, and work closely with clients. At UST, we recognized this trend early. Rather than waiting for AI systems to replace employees, we created “uplift” paths: professional training, role transitions, and the adoption of advanced tools, ensuring our teams remain relevant in the new era.

In conclusion, the AI era does not mark the downfall of the IT industry - but rather the next chapter in its evolution. Companies that recognize that this revolution requires a deep shift in their business model and value proposition will find that the market offers new, meaningful opportunities. Technology may evolve quickly, but real value will always come from those who know how to connect tools, people, and goals. That is precisely the role of the IT industry in the years ahead.

Maayan Shahar is the Managing Director of UST Spark.