A new technology model called Services-as-Software is poised to fundamentally reshape the global services industry over the next 3-5 years, according to Bernstein analyst Richard Nguyen. The model delivers services primarily through AI-powered software rather than traditional human labor, with customers paying for outcomes instead of hours. This shift is accelerating as enterprises plan to replace people-run services with software-run services.

Bernstein projects the sector could reach up to $700 billion by 2028, up from less than $20 billion in 2025, while HfS Research estimates revenues of $600 billion in 2028 and $1.5 trillion by 2035. The transition is expected to significantly reshape budgets, with Services-as-Software projected to account for 20% of IT spend by 2028, compared with zero today. For providers, this means reorganizing workforces to include digital workers alongside human employees and moving up the value chain with more consulting and intellectual property.

The revenue prospects look favorable, with expected growth of 30% or more and potential for margin expansion to 65-70% for gross margin and 15-25% for operating margin. Companies positioned to benefit from this shift are expected to see substantial gains as enterprises increasingly adopt AI-driven service delivery models.