The future of IT services is shifting toward a hybrid model, blending artificial intelligence (AI) with human expertise to modernize outdated systems and accelerate service delivery, according to Francisco D’Souza, co-founder of private equity firm Recognize and former Cognizant CEO. D’Souza emphasizes that legacy modernisation and backlog reduction are emerging as key areas of opportunity for IT companies, particularly as AI—especially generative AI—proves effective at understanding legacy code, replatforming systems, and generating test cases.
AI-Driven Hybrid Services: The Future of IT Transformation
He explained that many enterprises are still burdened by technical debt and legacy systems, which slow innovation. However, AI is now enabling faster resolution of these issues, helping companies address long-standing backlogs more efficiently. With Recognize closing its $1.7 billion second fund, D’Souza highlighted the importance of evaluating how portfolio companies leverage AI internally and externally to drive transformation.
D’Souza envisions a “fundamental reset” in the services industry, where the traditional labour-intensive models give way to intelligence-enabled service delivery. This hybrid approach involves automation, proprietary platforms, and intellectual property combined with skilled professionals. Full automation, he said, is unlikely due to the complexity of legacy systems; instead, a middle-ground model—human workers augmented by AI—is expected to dominate.
AI Startups vs Legacy IT: A New Era of Enterprise Transformation
He compared this AI-driven disruption to earlier shifts in enterprise tech, like the rise of cloud computing. In contrast to the past, when businesses applied temporary fixes to legacy systems, modern demands for real-time responsiveness expose these systems as bottlenecks in an AI-first environment.
D’Souza also noted the contrast between large IT firms and lean AI-native startups. While traditional IT services companies work with legacy-heavy clients, AI-first startups, built on modern architectures, solve targeted problems rapidly. For instance, AI-powered startups like Cursor and Lovable have achieved $300 million and $40 million in annual recurring revenue (ARR), respectively, with teams of just 20 and 15. As IT giants prepare for this transformation, the integration of AI will define the next phase of growth and efficiency in enterprise services.
Summary:
Francisco D’Souza foresees a hybrid IT services future, blending AI with human expertise to modernize legacy systems and reduce backlogs. AI-native startups are rapidly scaling, while traditional firms face disruption. The shift toward AI-augmented service models marks a major reset in enterprise technology, emphasizing efficiency, automation, and real-time performance.
