If you can’t move your people, then move code—Services-as-Software is the new trade route

Trade wars used to be fought with ships and embargoes. Today, they’re waged with tariffs, regulatory chokeholds, and digital sovereignty laws. The US and China have been throwing economic punches for years. Europe has fortified its own walled garden with GDPR and AI regulations, and the new US administration has intensified trade tensions with Canada and Mexico. However, amid the geopolitical chaos, CEOs and CIOs see a huge opportunity to rise above the noise and exploit the rapid advances in AI and automation technology (Services-as-Software) to ensure their organizations remain competitive.

Protectionism is reinventing how services will be delivered to your organization

As a CIO, you must prepare for the impact: rising costs for offshore/nearshore talent, imminent price hikes on technology hardware and software, delayed hardware shipments, and service providers suddenly subjected to new regulatory constraints. But protectionism isn’t just disrupting your current vendor relationships—it’s fundamentally transforming how services will be delivered to your organization.

The more governments try to lock down supply chains, labor markets, and data flows, service providers are left with no choice but to accelerate their shift toward Services-as-Software (SaS). By automating and digitizing service delivery, they’re reducing their reliance on people, physical goods, and traditional offshoring models, and this will change how you consume and integrate professional services across your organization. Savvy service providers will shift the delivery of software-based services to the US (or whatever location avoids financial penalties) to give their clients services unencumbered by government interference.

Isolationist politicians are fighting an outdated battle—and businesses know it

Governments pushing protectionist policies are stuck in a pre-World War II old-world paradigm, where economic strength comes from manufacturing dominance and self-sufficiency. The problem is that’s not how the world works anymore, where the internet has connected the world’s supply chains and commercial constructs to such an extent that it’s impossible to put the genie back in the bottle. Today’s industries thrive on interdependence and connectedness, yet leaders are doubling down on a model that no longer fits, as elaborated below:

• Higher tariffs hurt foreign competitors and force domestic companies to rethink their cost structures. When importing materials, talent, or services becomes too expensive, companies don’t just “buy local”—they look for ways to automate, outsource to neutral or local territories, or digitize entirely.
• Regulatory barriers designed to “protect” industries often backfire. Companies don’t wait for governments to make business-friendly policies—they adapt, find workarounds, or relocate operations. The result is a push toward digital models that make national borders irrelevant.
• The countries pushing hardest for economic independence are often the ones that need global markets the most. China promotes self-reliance but remains reliant on foreign semiconductors and global exports. Meanwhile, the US is threatening new tariffs on key imports, including steel, aluminum, and electric vehicles, while still depending on critical minerals, pharma, and manufacturing supply chains from abroad.

Protectionism isn’t making industries stronger—it’s forcing them to become leaner, smarter, and less reliant on national economies, accelerating the shift to software-driven, automated service models.

Protectionism creates a compelling opportunity for CIOs with SaS

When governments raise trade barriers, service providers don’t wait for a diplomatic resolution—they adapt. Increasingly, the adaptation strategy is Services-as-Software—the shift from human-dependent services to fully automated, software-driven solutions (See Exhibit 1).

Exhibit 1: HFS Services Tech Vision 2030

Source: HFS Research, 2025

We’ve seen this playbook before. The first industrial revolution mechanized labor, the second optimized mass production, and the third digitized processes. Now, we’re in the next phase—the automation of services, where routine work that once required people, physical goods, and often cross-border transactions is being rewritten as code. Professional IT and business services companies such as Infosys, IBM, Genpact, Cognizant, KPMG, and Accenture are already repositioning their strategies to align with this vision.

But this SaS shift isn’t just about avoiding tariffs or dodging supply chain constraints—it’s transforming how value is created and delivered. All these protectionist policies are doing is accelerating the development of SaS because of the following:

• Weakening dependence on offshore labor: AI-powered services eliminate the need for massive offshore teams, cutting exposure to labor costs and visa restrictions. In many instances, scaled-down onshore teams supporting a SaS model can perform the same work at similar or even less cost and arguably increase analytical value.
• Automated compliance at scale: Software-driven services embed compliance into the code instead of navigating country-by-country regulations.
• Resilient, tariff-proof supply chains: Businesses that once relied on imports can now deliver services via cloud-based automation, skipping geopolitical bottlenecks entirely.

The old playbook—offshoring to low-cost regions—is likely being replaced with software-first service delivery. The big question is whether the human element of services remains offshore or if the cost benefits encourage services to move onshore or be eliminated. CIOs must rethink their vendor relationships because how they buy and integrate services are fundamentally changing. They need partners aligned with their needs to support their transformation path to SaS.

CIOs must adapt as services shift from people to code

When electric and hybrid vehicles entered mainstream consumer markets, dealerships needed to retrain their staff to understand how to sell and maintain hybrid and pure electric vehicles in addition to traditional gas vehicles. The same is happening with SaS models entering the enterprise equation. CIOs should adapt their knowledge and skills to program work types into software applications, work with their C-Suite counterparts to drive the process, and support the significant change management aspects involved. It’s one thing to move work from onshore people to offshore people. It’s an entirely different proposition to move work from people to computers.

CIOs should understand the implications for their operations, technology strategies, and vendor relationships:

• Changing commercial models: Traditional FTE-based pricing structures are giving way to subscription and consumption-based models, which may require different budgeting, procurement, and governance approaches.
• Shifting partnership dynamics: Relationships with consultants, systems integrators, and managed service providers are becoming more like SaaS vendor relationships, with significant implications for security, compliance, and integration.
• New implementation challenges: As services become more automated, bridging business requirements and service outcomes requires different skills when platforms replace human intermediaries.
• Integration considerations: Organizations need integration strategies for automated service platforms with embedded workflows rather than adapting offshore teams to existing processes.
• New governance frameworks: When software—not people—delivers services, governance must shift from vendor relationship management to overseeing APIs, data flows, and automation.

Preparing for the SaS Future

CIOs should take proactive steps to get ahead of the shift:

• Assess service automation potential: Identify which functions, processes, and services are primed for automation based on labor costs, regulatory exposure, and technology maturity.
• Evolve procurement strategies: Redefine vendor selection and contracting models for SaS, shifting from FTE models to AI-driven service consumption.
• Implement governance frameworks: Establish new oversight models focused on compliance, automation monitoring, and outcome-based service evaluation.
• Develop integration capabilities: To prepare for a code-based service delivery model, build expertise in agentic AI, workflow orchestration, and automation-first architectures.
• Align business expectations: Educate stakeholders on how service consumption patterns will evolve, ensuring that business units adapt to automation-driven service delivery.
• Manage the AI fear and cultural impact: Recent HFS research shows that 45% of enterprise executives fear AI will take away their jobs and negatively impact company culture. CIOs must take charge by running AI boot camps to educate teams, showcase AI’s potential, and inspire a mindset shift toward AI-enabled roles.

SaS isn’t an island—enterprises still need ecosystems

Let’s be clear: while Services-as-Software may provide an escape hatch from protectionism, it doesn’t eliminate the need for interconnected ecosystems or people. AI and automation might replace some people, physical assets, and manual workflows, but they can’t substitute collaboration, shared data, and platform interoperability. No company operates in a vacuum, and no tech stack functions without dependencies.

The Bottom Line: CIOs must prepare for a world where many services are delivered through software, not people—protectionism is merely speeding up the inevitable.

CIOs can’t afford to treat protectionism as just a policy shift—it’s fundamentally reshaping how services are delivered and consumed. The move toward Services-as-Software is accelerating, forcing enterprises to rethink vendor relationships, integration strategies, and governance models.