VENDOR · GLOBAL
AI vendor business model stress: companies racing between commoditization and control
Industry analysis warns that AI vendors face a squeeze: open-source models + distillation erode pricing power (commoditization), while safety/compliance certifications become the only sustainable moat. Vendors must shift revenue from model licensing to managed services (consulting, monitoring, risk frameworks) or risk margin collapse.
WHY IT MATTERS
BFSI procurement teams should expect vendor pricing to compress 30-40% over 18 months. Negotiate away from per-token or per-inference pricing; lock in managed-service contracts with SLAs and compliance guardrails. Pure model licensing plays will not survive; look for consolidation of weaker vendors by 2027.
Source: Hindustan Times · 2026-07-25