Stop waiting for proof: Services-as-Software™ is driving non-linear growth

Enterprise leaders, these five breakout providers—Cognizant, Persistent, Coforge, Mphasis, and EXL—demonstrate that growth can finally be decoupled from headcount. It’s time to demand the same outcomes in your own engagements.

At HFS, we coined the term “Services-as-Software” (SaS) last year to describe the reinvention of the services industry, moving away from linear, labor-driven models toward software-like economics, where growth and profitability scale through platforms, artificial intelligence (AI) agents, and automation, rather than headcount.

Enterprise leaders have been stuck with their services spending anchored to labor-based models. Early signs from a few providers show that achieving non-linearity (de-linking from headcount) in such expenditures is finally possible. Services-as-Software isn’t a theory anymore; it’s happening. The only question is whether service provider partners are keeping up.

The latest performance data from leading service providers shows some early proof points. A small group of firms is decoupling revenue and margin from workforce size. Both top-line (revenue per FTE) and bottom-line (margin per FTE) are growing without armies of new people. But these are early signals, and the industry average remains largely flat.

Exhibit 1: Five breakout providers are effectively delinking revenues and margins from headcount

Source: HFS Research, service provider earnings reports, 2025

These five providers are scaling revenue and margin without scaling headcount

Five firms, Cognizant, Persistent, Coforge, Mphasis, and EXL, are showing what happens when you start to shift away from pure labor-arbitrage models.

• Cognizant is scaling AI agents with Neuro and Agent Foundry while reskilling talent at scale through Synapse to prepare for an AI-driven pricing future.
• Persistent is converting innovation labs into outcomes, using hyperscaler partnerships to scale generative AI (GenAI) adoption, and embedding responsible AI governance into delivery.
• Coforge is expanding into new verticals while pushing productized platforms, such as Forge-X and AgentSphere, to move beyond time-and-materials models.
• Mphasis is launching Mphasis.ai and a GenAI Foundry with AWS, with more than 60% of new deals now AI-led, embedding efficiency and non-linearity directly into deal structures.
• EXL is redesigning workflows in insurance and healthcare with automation, data engineering, and AI, ensuring that improvements directly translate into increased margins.

Let’s not over-romanticize it: even these breakout firms haven’t fully embedded Services-as-Software into their DNA. Some margin uplifts reflect structural levers, such as utilization, bench optimization, and sharper pricing. However, the early markers are clear. We see more AI-led deals, productivity gains, and platform evolution.

Most providers, mired in old models, are dragging enterprise clients down

The industry is sitting on a burning platform. The world is demanding new economic models, but most providers are still clinging to outdated ones. Outside the breakout firms, the industry average is flat on both revenue per FTE and margin per FTE.

• Revenue per employee hasn’t moved. Despite billions poured into AI initiatives, most providers still grow by hiring more people — the same model that worked in the 2000s, not the 2020s.
• Margins remain stuck. Rising wage bills, delivery inefficiencies, and the absence of scaled automation are choking profitability.
• Demand for legacy services is stagnant. Application maintenance, infrastructure management, and other traditional lines are stuck in low single-digit growth, with pricing under constant pressure.
• Geopolitics is tightening the noose. The HIRE Act and renewed H-1B visa restrictions are clear warning shots: the era of easy labor mobility is ending. The old model of shipping armies of talent across borders is under siege.

Put these five themes front and center in your engagements with providers

From the five breakout service partners, we see five themes that must become industry-wide priorities in enterprise–provider engagements.

1. Leverage platforms and intellectual property. Stop buying bodies. Demand reusable platforms, AI agents, and industry solutions that scale like software.
2. Access talent at scale. Ensure that your partners have a workforce that possesses the requisite AI-first skills and tools—not a few thousand but hundreds of thousands. Service providers are only as strong as the capabilities of their people.
3. Demand vertical relevance. Jointly focus on AI and automation where the impact is clear, and demand solutions grounded in domain expertise that accelerate outcomes, not just technology for technology’s sake.
4. Evaluate ecosystems. No one wins alone. Your partners’ hyperscaler partnerships and co-innovation foundries are the accelerators for scaling AI from proof of concept to production.
5. Reinvent deal structures. The economics must shift from headcount-based billing to AI-led, outcome-driven contracts where productivity gains and platforms define value. Service providers’ internal incentives must reinforce this shift, rewarding teams for driving SaS outcomes rather than traditional utilization.

The Bottom Line: Services-as-Software is your viable path to non-linear growth. Demand it now.

Enterprise leaders must stop accepting labor-based proposals and start rewarding partners that bring platforms, AI, and outcomes to the table. Services-as-Software isn’t a nice-to-have. It’s your only shot at sustainable growth.

Provider leadership matters, but only when it drives your outcomes. If your provider’s senior executives aren’t actively shaping the engagement, challenging delivery assumptions, and pushing their teams toward platform-led value—as leaders like Ravi Kumar at Cognizant and Sudhir Singh at Coforge are doing—they’re not serious about this shift. Treat executive commitment as a litmus test: purposeful leadership accelerates transformation. Absent leadership stalls it.