Many people are currently producing business cases for AI in IT. In this article the considerations and a rough outline of the changing costs. is provided Of course, each organization and each AI implementation are different. The rough numbers here must be customized for your use cases and the current and future state that apply for you.

Considerations:

  • AI will do a lot of work that IT Staff currently does. However, that does not mean the loaded labor cost will be reduced pro rata.
    • IT staff will also do other work or be let go, but those who stay will hold on to the licenses/facilities that they had
    • Letting go of staff in European Countries is not cheap or easy to do. HR and Legal Costs will spike, and severance packages will hit the budget quite hard
    • The internal IT workforce needs to be upskilled and/or replaced. This will require a massive and expensive organizational change program.
  • AI is not (yet) mature and does not (yet) invent/implement itself. The cost of the introduction of AI in the upcoming years will outweigh the obtained savings
    • Enterprises do not have enough AI experience in-house and will need to bring in external resources to help them to innovarte & implement
    • Majority of the enterprises do not have the prerequisites for AI in place. Data -the food for AI- needs to be gathered, cleansed, and made available.
    • There is no paved AI path. Over the following years, a lot of hit-and-miss projects are to be expected that will eat budget but do not produce savings
  • The companies that now charge for fulfiller licenses want to continue to grow their revenue streams. AI platform functionality will not be cheap.
    • The next five years, the old and the new way of working will coexist. SAAS Vendors have a max of 5 years to transform into an AI company.
    • Loss of revenue for obsolete fulfiller licenses must be replaced by (at least) the same revenue for AI platform capabilities
    • SAAS providers are investing heavily in AI today; those investments must be returned from AI revenue streams.
  • The companies that currently provide IT services using cheap labor want to continue to grow their revenue streams as well. They will change as well or go bust.
    • The Big-Five Indian Companies (Tata Consulting, Infosys, HCL, Wipro, and Tech Mahindra) are investing heavily in AI variants of what they provide today.
    • It is highly likely that these companies will soon provide Commodity AI Agents that Western companies can integrate with, at a fraction of the cost of DIY..
    • The Big Five will upskill their staff so that they can provide AI expertise at a much lower hourly rate than is possible in Western Countries.

According to the World Economic Forum, AI is will reduce the Total Cost of Ownership of IT, between 25% and 40%
if a company currenty spends 100 Euro per year on IT, that will become 75 Euro by 2030 due to AI. Approx. 50% of IT Staff need to transition to another role.

  • Internal/External Labor costs will reduce by 53% (from 40 to 19)
  • AI Operations/Maintenace cost will increase by 50% (from 10 to 15)
  • AI License and Transaction costs will increase by 125% (from 5 to 11)
  • Current investments in AI implementations will reduce by 62% (from 20 to 8)
  • Security & compliance will increase with 50% (from 5 to 7)
  • Upskilling staff cost will increase with 200% (from 2 to 6)
  • Other IT cost will decrease by 50% (from 3 to 1.5)
If these reports are a measure of what is to come, the following may be expected:
  • IT Companies that do not embrace AI will have a 25-40% higher cost price than those who do. I.e. AI is not a voluntary choice.
  • Within the next 5 years, 50% of the offices used by IT Staff may become available for other departments/companies.
  • The cost for Operations and Maintenance of AI by far will exceed the cost for Humans in 2030
  • Companies need to either upskill their staff or let them go and outsource all AI work to external MSP (local, near-shore or off-shore)
  • If companies massively outsource AI work off-shore, the unemployment rate in NL (as well as the tax rate) will drastically increase.
Besides above, hundreds of the SAAS solutions that companies use today will be transformed into (or replaced by) automated AI-Agents..