A software developer in a dimly lit office, surrounded by screens and AI-related visuals.
Major software firms are undergoing a ‘re-founding,’ deciding whether to integrate AI into existing systems or rebuild from scratch, as highlighted by Inc42. This shift coincides with significant tech layoffs; over 90,000 tech workers lost jobs in the first 97 days of 2026, according to TrueUp. Oracle cut 30,000 employees to fund a $2.1 billion AI infrastructure restructuring.
This transformation requires AI-native approaches, differing from traditional software development. Redpoint Ventures notes that AI-native companies need first-principles thinkers, inverting product development from customer-led to capability-led. Economics shift from 75-80% gross margins to 50-60%, with scaling inference costs. Sales evolve to field deployment engineering, focusing on proof of concept and customer education.
Satya Nadella’s Microsoft is cited as a successful re-founder. Since 2014, Microsoft shifted its focus to Azure and AI, growing its market capitalization from $300 billion to over $3 trillion by fiscal year 2025. This involved exiting unprofitable markets and restructuring the company culture.
Other examples include Handshake, which grew its AI business to $100 million in annual revenue by pivoting to an expert network for AI post-training. Airtable launched Superagent and acquired DeepSky for AI capabilities. Opendoor, however, faced challenges, with revenue declining to $915 million, illustrating the need for solid operational foundations.
A Harvard study indicates that junior employment declines by 7.7-10% within six quarters of generative AI adoption, while senior employment rises. A Stanford study showed a nearly 20% drop in employment for software developers aged 22 to 25 since late 2022. This highlights the need for companies to balance AI integration with talent development.
Inc42 notes India’s SaaS ecosystem is well-positioned for this shift, due to its cost advantages and talent infrastructure. However, complacency could be a risk if companies don’t adapt to AI-native product development and workflow redesign.
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