For decades, IT services firms made billions of dollars by allowing companies to outsource tech tasks like customizing, integrating, and maintaining enterprise software. Vishal Sikka, former CEO of Infosys, one of the largest such firms in India, is now betting that AI can do much of that work instead.

His new startup, Hang Ten Systems, has raised a $32 million seed round led by Mayfield, with a strategic investment from Aramco Ventures and participation from angel investors. The startup, whose board includes Yahoo co-founder Jerry Yang, aims to help enterprises continuously build, modify, and operate software using AI-driven development and automation. The company says it is already working with customers such as Siemens Gamesa Renewable Energy and Fresenius on AI-native project delivery.

The Vision Behind Hang Ten Systems

Sikka, 59, spent 12 years building enterprise software at SAP, later serving as a board member for Oracle, and then as CEO of Infosys. After stepping down from Infosys in 2017, he founded VianAI, which emerged from stealth in 2019 with $50 million in seed funding and later raised $140 million in a 2021 round led by SoftBank Vision Fund 2. Now, Hang Ten represents his latest bet on AI reshaping the enterprise software landscape.

According to Navin Chaddha, managing partner at Mayfield, the company “just got started a month back” and already has customers. Chaddha emphasized that Hang Ten is distinct from VianAI, which focused on enterprise AI applications and analytics tools for decision-making. Hang Ten, by contrast, describes itself as an enterprise AI services company built around agentic code generation, reusable AI skills, and domain expertise.

The early crew includes executives who have worked with Sikka for years across SAP, Infosys, and VianAI. Among them are co-founders Navin Budhiraja, the startup’s CTO; Sanjay Rajagopalan, its chief design officer; and Tao Liu, its senior vice president of forward deployed engineering.

How AI Is Disrupting IT Services

Hang Ten enters a market where IT services firms, including Infosys, are racing to adapt to AI through partnerships with companies like Anthropic and OpenAI. The startup’s launch comes amid a growing debate over whether AI will expand the industry’s addressable market or fundamentally alter how enterprise software is built, maintained, and delivered.

Analysts at Jefferies argued earlier this year that IT services may be among the first sectors to face meaningful AI disruption. Infosys chairman Nandan Nilekani, however, has said AI could expand the industry’s addressable market. Infosys itself has sought to position AI as an opportunity, telling investors that “AI-first services” could represent a $300 billion to $400 billion market by 2030. The debate comes as investors reassess the outlook for traditional IT services firms, with Infosys shares down over 35% this year.

Clearly, some enterprises are eager to try the AI-services idea, especially from someone as experienced as Sikka. Mayfield backed Hang Ten because of Sikka’s career experience and its belief that the startup’s AI-native model can scale differently from traditional services firms. “Traditional services scale linearly with headcount,” Mayfield said. “Hang Ten is built so its leverage grows with every project.”

Background on Vishal Sikka and the IT Services Industry

Vishal Sikka joined Infosys in 2014 as its first non-founder CEO, bringing a technology-focused vision to a company known for its scale and long-standing leadership. Under his tenure, Infosys invested heavily in automation and AI, including the launch of the AI platform Nia (now Infosys Topaz). He resigned in 2017 amid tensions with the founders over governance and strategy. Prior to Infosys, Sikka was the CTO of SAP, where he led the development of the in-memory database SAP HANA, a transformative product for enterprise applications.

The IT services industry, centered in India, has long relied on labor arbitrage – hiring thousands of engineers to handle maintenance, customization, and integration of software from giants like SAP, Oracle, and Microsoft. Firms such as Infosys, Tata Consultancy Services (TCS), and Wipro have built billion-dollar businesses on this model. However, the rise of cloud computing, low-code platforms, and now generative AI threatens to automate many of the routine tasks that generate the bulk of their revenue.

Hang Ten aims to capture this shift by combining AI agents that can write and modify code, manage software configurations, and deploy updates with minimal human intervention. The startup emphasizes reusable AI skills, meaning that as its systems handle more projects, they become more efficient and effective. This stands in stark contrast to traditional service firms, where each new project requires fresh human effort and expertise.

Funding and Board Insights

The $32 million seed round is notable for its size and backers. Mayfield, a leading venture capital firm, has a history of investing in enterprise AI and infrastructure. Aramco Ventures, the corporate venture arm of Saudi Aramco, brings strategic insight into energy and industrial sectors, where Hang Ten’s early customers like Siemens Gamesa operate. Jerry Yang, co-founder of Yahoo, joining the board adds credibility and connections in Silicon Valley.

In a blog post announcing the venture, Sikka said Hang Ten was already helping large enterprises “hang ten on the biggest wave of our lifetimes,” a surfing metaphor that underscores his enthusiasm for AI-driven transformation. The company is headquartered in the Bay Area and is hiring across delivery, engineering, sales, and leadership, with plans to expand globally to meet enterprise demand.

The timing of the launch is strategic. As companies experiment with AI to cut costs and speed up development, the demand for AI-native services is rising. However, questions remain about reliability, security, and compliance – issues that Hang Ten will need to address to win large contracts. The involvement of Sikka, a well-known figure in enterprise software, may help allay some concerns.

Hang Ten’s approach is emblematic of a broader trend: startups and incumbents alike are racing to build AI agents that can perform complex software engineering tasks. Companies like GitHub (with Copilot), Replit, and various startups are also targeting this space. But Hang Ten’s focus on enterprise services – rather than just tools – differentiates it. It aims to be a partner that takes end-to-end responsibility for software delivery, akin to traditional IT services but powered by AI.

The next few years will reveal whether AI truly disrupts the IT services industry or simply expands it. With Sikka’s track record and a strong seed backing, Hang Ten is positioned to be a key player in this transformation.

Source: TechCrunch News