Department of IT Efficiency (DITE): How DITE Could Bite IT Service Market

One of the recent highlights of the US Presidential Election is the creation of the Department of Government Efficiency (DOGE), led by Elon Musk and Vivek Ramaswamy. Appointed by Trump, DOGE aims to streamline federal bureaucracy by slashing regulations, cutting expenditures, and restructuring agencies, targeting the rationalization of the approximately $7 trillion federal budget.  This blog analyses whether DOGE could inspire a similar initiative in enterprises, specifically a Department of IT Efficiency (DITE), to streamline IT and technology operations.

Can DOGE inspire DITE in enterprises?

Will enterprises seek out a Department of IT Efficiency (DITE) to streamline their IT and technology operations?

The need is there, and so are the means. Will it happen?

It is already happening, but we only see it in bits and pieces. The question is, what if it happens more aggressively?"

Earlier Examples of DITE:

• Elon Musk bought Twitter and fired 80% of the staff, reducing the company's workforce from around 7,500 to approximately 1,500. Twitter continues to operate effectively, demonstrating the potential for efficiency in a company's operations.
• Zerodha, a leading online stock trading platform in India, generates billions in revenue with only 35 people on its tech team.
• Telegram, a leading messaging app with billions of users globally, operates with just 15 people in its tech team.
  

What is happening now in DITE?

• Salesforce will not hire additional engineers this year (2025) due to AI-driven productivity improvements.
• Meta’s Mark Zuckerberg predicts that AI will be as good as mid-level engineering in coding by 2025.
• Despite good business and profits, layoffs are occurring in tech firms. Almost all major tech firms have laid off employees despite experiencing good sales growth and profitability. These are not traditional cost-cutting layoffs but rather rightsizing.

The likely explanation is that tech firms are already implementing DITE strategies, although the pace is gradual.

GenAI will enable and accelerate DITE

Now, the means are available to generate efficiency in IT operations:

• GenAI can improve productivity and efficiency by providing assistance in coding, testing, documentation, etc.
• Agentic AI goes a step further than GenAI by not only assisting but also autonomously building and testing applications.
• Services as a Software represent a paradigm shift. Unlike the earlier SaaS wave that provided only software, vendors can now deliver services through their software, resulting in a significant improvement in efficiency and reducing the total cost of software plus labor.

How? What are the levers for DITE?

• Management Efficiency: Any organization experiencing unchecked growth tends to become bureaucratic, with many levels and hierarchies increasing overhead costs and slowing down decision-making and execution. In these times, enterprises might not need so many layers. With AI, managers can oversee broader spans.
• Role Redundancy: Many roles have become mere messengers, either within, up, down, or outside the organization, which should be reevaluated. On the technical side, many roles requiring summarization, documentation, updating, and following rule-based processes can be automated with AI.
• Team Productivity: AI can enhance both individual developers and team productivity across the Software Development Life Cycle (SDLC).
• Rearchitecting Software: Services as Software have the potential to unbundle and rearchitect monolithic enterprise and SaaS software, removing per-seat pricing and allowing only the necessary features to be used. Agentic AI can further automate this process.
• Reengineering Process: Rethinking the SDLC with the impacts of GenAI, Agentic AI, and Services as Software can lead to a reimagined process with less hierarchy, fewer roles, more productive teams, and unbundled software. The goal is to save costs and time, reduce rework, and improve quality.
  

Where? The order in which DITE can happen:

• ISVs: Initiatives have already started by companies like Salesforce, Microsoft, Meta, and Google. ISVs are at the forefront of GenAI and Agentic AI, and have begun using these technologies in their internal operations. Currently, big ISVs are going public with this, and as more success stories emerge, other ISVs will likely follow.
• Enterprises: Internet enterprises such as Klarna have already started implementing these technologies. Following the success stories of ISVs and Internet enterprises, many more enterprises may explore similar initiatives.
• GCC: Indian GCCs are currently in a growth phase. While enterprises are rationalizing their workforce in other locations, they are expanding in India. If they find success with DITE strategies elsewhere, they might implement them in GCCs as well.
• Service Providers: Service providers may lag in adopting DITE. They will likely act when their clients demand benefits from DITE in both new and existing deals

So if DITE takes hold, what can stakeholders do?

• IT Professionals: Those working on GenAI development are on a growth path. Others should learn how to use GenAI. As the saying goes, AI won't replace you, but someone using AI might. Consider how GenAI can enhance your productivity in your workflow of activities. Be proactive and become an expert user, even if no one asks you to. It will be beneficial for your future.
• Service Providers: Service providers tend to be proactive about GenAI in new deals and cautious in current engagements. They should embrace the changes brought about by DITE and GenAI. Being proactive, they can guide enterprises by creating a DITE roadmap that includes rearchitecture, reengineering, and implementation. If they don’t, another service provider will.
• Enterprises: Enterprises should proactively inquire with their service providers about DITE possibilities, both in existing engagements and in new contracts or renewals.

Overall, DITE or GenAI is not a doomsday scenario for IT service providers.

DITE will reduce spending on existing work from current levels but it also has two silver linings:

• Implementation in the short run will increase the work pie as enterprises need to be data-ready to leverage GenAI and Agentic AI.
• New areas will come into scope. Across every function and industry, the scope of technology can be expanded, thus opening additional market opportunities.

Overall, the impact could be positive in the medium term for proactive service providers.

Bottom Line: DOGE will prompt enterprises to consider DITE as well. DITE offers potential benefits that enterprises will find hard to resist. Who doesn’t want to be more efficient, effective, and achieve more with fewer resources? It is up to service providers to view this as a challenge or an opportunity. DITE will only impact those who are unprepared. When enterprises raise the bar, prepared service providers will rise to meet it.