Archive · 30 Jul 2026
Outsourcing Model Declines as AI Drives Enterprise Spending
Chamath Palihapitiya, the boss of a company called 8090, said that the old way of paying for software work by the hour is losing its importance.
He pointed to Infosys, a big IT firm, which lowered its earnings forecast because companies are spending less on outsourced hours and more on AI tools.
He explained that the hourly model works best when work is slow and manual, but AI lets businesses build software quickly and see exactly what it does.
Large companies that need very precise software are using 8090’s AI platform to rewrite old code and save money.
8090 recently raised $135 million from investors like Salesforce to grow its AI software platform.
8090 CEO Chamath Palihapitiya says time‑and‑materials outsourcing is losing relevance as enterprises shift to AI solutions they can control.
Infosys lowered its revenue forecast, citing a move away from outsourced engineering hours toward AI‑driven software development.
Palihapitiya argues the hourly billing model works only when work is slow and manual; AI allows rapid, observable development, undermining that model.
Large regulated enterprises are adopting AI‑led development to modernize legacy systems and cut sunk costs, using 8090’s Software Factory.
8090 recently raised $135 million in Series A funding led by Salesforce Ventures, with other investors including WNDR, Craft Ventures, The Production Board, and LAUNCH.
- Who
- Chamath Palihapitiya, CEO of 8090
- What
- Declared that the time‑and‑materials outsourcing model is becoming irrelevant as enterprises shift to AI solutions they can control
- When
- July 30, 2024
- Where
- New Delhi, India
- Why
- AI allows faster, more controllable software development, reducing the need for hourly billing
- Company
- 8090
- CEO
- Chamath Palihapitiya
- Funding Round
- $135 million Series A
- Investors
- Salesforce Ventures, WNDR, Craft Ventures, The Production Board, LAUNCH
- Product
- Software Factory
- Industry Shift
- From time‑and‑materials outsourcing to AI‑driven development