AI-Driven Services to Command $700B Market by 2028
A new technology model dubbed Services-as-Software is set to capture up to $700 billion of the global services industry by 2028, according to a Bernstein analyst note published on February 9, 2026. The model shifts the industry away from billing for human labor hours and toward charging for outcomes delivered primarily by AI-powered software. This transition is accelerating as six out of ten enterprises plan to replace people-run services with software-run services by 2028. Projections cited from Gartner show the market growing from less than $20 billion in 2025, while HfS Research estimates it could reach $600 billion in 2028 and $1.5 trillion by 2035.
Providers See 30% Growth Potential in New Model
The transition to an AI-first delivery model offers significant financial upside for adaptable service providers. Bernstein projects that successful firms can achieve revenue growth of 30% or more while expanding gross margins to between 65% and 70%. Operating margins are forecast to reach 15-25% as software replaces more costly human capital. To capitalize on this shift, providers must restructure their workforces to integrate AI agents and enhance their offerings with consulting and proprietary intellectual property. This new category is expected to constitute 20% of total IT spending by 2028, a substantial increase from its negligible share today. Bernstein identified European firms Capgemini and Reply as companies that appear well-positioned to benefit from this industry transformation.
