D’Souza believes that India has a significant opportunity to lead in artificial intelligence (AI), calling it “one of the most profound technology shifts and technology changes that we’ve seen.”
IT services industry is evolving, he said, adding that firms must now move beyond the traditional model of providing skilled personnel to creating intellectual property (IP).
“IT services firms of the future are the ones that are going to be willing and able to invest in creating specialisation, and that specialisation is going to come from investments in intellectual property,” D’Souza said in an interview with CNBC-TV18’s Shereen Bhan at Davos 2025.
These are the edited excerpts of the interview.
Q: This is, of course, the Trump Davos and all eyes are on President Trump and the inauguration later tonight. What’s the expectation? What will this Trump regime mean for IT services?
D’souza: We were here in Davos on the eve of President Trump’s inauguration, I think we’re at a time when the theme of Davos is cooperation in the intelligent age. The intelligent age is a shout-out to this incredible innovation that we’ve seen over the last few years in technology. And what’s going to happen is that over the coming years, the world, whether it’s businesses, governments, civil society, is going to get more and more technology-intensive.
And as the world gets more technology-intensive, it’s going to require IT services companies to help to make that technology come to life. As we sit here today, I have tremendous optimism for what the role of IT services is going to be over the coming decade.
Q: So, potential for significant growth from here, you believe?
D’Souza: The IT services industry is reinventing itself. We’ve already seen that happen over the last several years. There’s a fragmentation that’s going on to some extent where smaller companies are emerging, specialised companies in particular areas. That’s part of our thesis at Recognize. We’re investing in these smaller, more specialised services businesses. But you’ll see pockets of very fast growth in IT services for those that have figured out how to build the operating model of the future.
Q: What is going to be the operating model of the future? And I ask you this in the context of the AI bets that everyone’s making? You walk down the promenade, everyone’s hawking some kind of AI or the other. How do you differentiate yourself and create moats, especially from an Indian IT services standpoint?
D’Souza: I’ve been following AI for decades now. When I came to the United States for the first time, I came to Carnegie Mellon University because I was interested in AI. That was 35 years ago or so. And I did classes in AI. And of course, for many years after that, AI was somewhat in the background. But as somebody who’s followed the industry, I would say that this is probably one of the most profound technology shifts and technology changes that we’ve seen.
The opportunities are profound. From a services standpoint, we’ve said this for some time, but the moment has come now where services businesses have to get more IP intensive. The old model of providing just people and very knowledgeable, capable people without some form of software or other IP. Now that IP could be software, it could be data, it could be algorithms in the AI world, but you’ve got to have some of that in order to be competitive. The IT services firms of the future are the ones that are going to be willing and able to invest in creating that specialisation, and the specialisation is going to come from investments in intellectual property.
Q: What will that mean in terms of capital allocation to create these IP-led businesses that you speak of? Is there a willingness and appetite to do that at this point in time?
D’Souza: It’s difficult to make that transition, but if you think about the services world and the software world, if I can put it that way, those two worlds have been relatively separate worlds in the past, and you’re going to see those worlds coming closer together, and therefore the P&L or the balance sheets of the services firms starting to look a little bit more like software where you have to make some investments in R&D, allocate capital to upfront IP development and then monetise that IP over time.
Q: Do you believe that perhaps inorganic growth will drive this kind of IP driven growth that you talk about?
D’Souza: It’s certainly possible. For the larger firms that have the ability to do that, you’ll start to see some M&A. In fact, I would argue that maybe that started several years ago in my time at Cognizant. We bought TriZetto, which was a software business. We bought it because we liked the intellectual property that they had in healthcare. They have a very strong software stack. And so perhaps that M&A and others that were done in the industry around that time was the start of it. And perhaps you’ll see more of that.
Watch accompanying video for entire conversation.
