Software development and tech services in the cross-hairs as AI marches on

Business transformation, software development, and technology implementation are among the tech job categories likely to be hit hardest by AI, according to new research from Forrester. The global IT analyst company has researched how AI will disrupt various activities within the tech market, both among end users and vendors. It concluded that labor-intensive knowledge-work industries would face the greatest disruption. At the same time, enterprise software will be reshaped rather than displaced, allaying some concerns about a SaaSpocolypse. Every technology and service market is facing an AI overhaul," said Craig Le Clair, vice president and principal analyst at Forrester. Our research shows that AI's benefits will not be distributed evenly across technology markets. Only markets in three categories - infrastructure; data and AI; and identity, access, and network security - are broadly positioned for clear growth. Technologies in the other categories will be forced to adapt." Forrester argued that business applications, governance and compliance, process automation, and customer experience would change as AI transforms workflows and user experiences. While these categories are vulnerable to disruption, embedded workflows, regulatory requirements, switching costs, and growing demand for data, orchestration, governance, and trust capabilities help sustain their relevance," the report said. The analyst firm singled out application development and software as a category likely to be hit hard by AI rollout. These markets include tooling, content management, and IT management software that produce and run applications and connect bodies of knowledge. This includes application generation and low-code platforms, autonomous testing platforms, content management systems, digital experience platforms, knowledge management solutions, as well as enterprise architecture management suites," the report said. These activities and technologies are directly in the path of genAI-code development," Forrester added. Other markets in the crosshairs of AI include IT services. Direct AI substitution reduces core implementation work. Services to implement Oracle, Salesforce, SAP, and Workday all showed headwinds. The most severely disrupted market is business process outsourcing that will see lowervalue services, testing, and software development services sell at reduced rates," Forrester said. The colossal investment in AI - including astronomical datacenter building plans - has led Gartner to raise its 2026 estimates for the total IT market to $6.37 trillion, a surge of 14.2 percent year-on-year. That's up from April's forecast of $6.31 trillion and February's $6.15 trillion. A lot of that growth comes from the technology industry itself, which already invests around $1 trillion. That figure is set to grow by 34.7 percent over 2026.