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, ambitious 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 policies force businesses to radically rethink their access to talent, technology and resilience
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. But the world doesn’t work that way anymore. The Internet has woven supply chains and commerce so tightly together that there’s no undoing interdependence. Yet, leaders are doubling down on restrictions that force businesses to rethink how they access talent, technology, and supply chains.
- Higher tariffs don’t just raise costs—they force automation. Companies aren’t waiting around for trade deals to stabilize. If importing materials, talent, or services becomes too expensive, they don’t just “buy local”—they digitize, automate, or move to neutral zones where protectionist policies don’t apply.
- Global supply chains are too complex to rewind. Cutting off trade doesn’t make them simpler—it makes them unpredictable. Businesses are already restructuring operations around AI, automation, and nearshoring, not because they want to but because they can’t afford to be caught in the next tariff war.
- Regulatory barriers don’t protect industries—they push them toward digital models. Businesses don’t wait for favorable policies; they engineer workarounds. The more fragmented the regulatory landscape becomes, the more companies rely on software-driven services that make national borders irrelevant.
- The loudest advocates for economic independence are still deeply dependent on global markets. China pushes self-reliance but still relies on foreign semiconductors and global exports. The U.S. is doubling down on tariffs for key imports—steel, aluminum, electric vehicles—while still needing foreign critical minerals, pharmaceuticals, and offshore manufacturing.
Protectionism isn’t making industries stronger—it’s forcing them to become leaner, faster, and more reliant on technology instead of people. And that’s where Services-as-Software comes in.
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:
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 them 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 must 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.
Posted in : Agentic AI, Artificial Intelligence, Automation, Business Process Outsourcing (BPO), Buyers' Sourcing Best Practices, GCCs, GenAI, IT Outsourcing / IT Services, Large Language Models (LLMs), Politics, Tariffs
