In a candid assessment that could rattle investor confidence in established software giants, Arthur Mensch, the CEO of AI startup Mistral AI, has projected that over half of the enterprise software currently in use could be supplanted by artificial intelligence. This bold assertion comes at a time when the software sector is already experiencing turbulence, with companies like Anthropic launching new AI-powered products that fuel concerns about AI’s encroaching capabilities.
The broader market sentiment appears to echo Mensch’s perspective. The iShares Expanded Tech-Software Sector ETF, a prominent index tracking major software players including Microsoft and Salesforce, has seen a decline of over 20% this year. Similar downward trends have been observed in India’s major software stocks, such as Tata Consultancy Services and Infosys.
Mensch articulated his view during the India Accelerates event, held on the sidelines of the AI Impact Summit in New Delhi. “More than half of what’s currently being bought by IT in terms of SaaS is going to shift to AI,” he stated, emphasizing the transformative speed at which AI is accelerating software development.
The core of Mensch’s argument lies in the potential for AI to streamline and customize business operations. He explained that with the right infrastructure in place, enterprises can connect their data to AI systems to create bespoke applications for specific workflows. “We do see with our customers… in a couple of days, we can create fully custom applications to run a workflow, to run a procurement workflow, or to run supply chain workflows, for instance, in a way where I would say five years ago, you would actually need a vertical SaaS,” he elaborated.
This phenomenon, Mensch described, is a “replatforming” of IT systems, where businesses are actively seeking to integrate AI as a more efficient and cost-effective alternative to legacy SaaS solutions. He noted that over 100 enterprise clients are already engaging with Mistral AI on this basis, exploring the replacement of older, more expensive systems. “They see AI as a way to replatform the thing so that it becomes more efficient and less costly,” he remarked.
However, Mensch drew a distinction between workflow-oriented software and “systems of record.” He clarified that software responsible for core data management within an organization, often referred to as systems of record, is unlikely to be replaced by AI. Instead, these systems are expected to work in conjunction with AI, forming a more robust and integrated technological backbone.
This perspective finds resonance with Bipul Sinha, CEO of Rubrik, who also shared his insights with CNBC. Sinha agreed that “workflow software” is ripe for significant disruption by AI, but echoed Mensch’s sentiment that “system of record or data infrastructure software that is enabling AI, will be a positive.”
**Mistral AI’s Strategic Expansion into India**
Beyond his observations on the broader AI landscape, Mensch also revealed Mistral AI’s concrete expansion plans for India. The company intends to establish its first office in the country this year, targeting a market that is increasingly a focal point for global technology firms.
While Mistral AI currently collaborates with international corporations that have an established presence in India, the company is now actively identifying and engaging potential clients within both the public and private sectors domestically.
In contrast to its European strategy of building its own data centers, Mistral AI plans a partnership-driven approach in India. This involves collaborating with local companies that already possess the necessary physical infrastructure. This strategy aligns with the Indian government’s push for AI firms to develop models that can operate locally, with data remaining within the country’s borders. Furthermore, Mistral AI highlighted its capability to accommodate India’s diverse linguistic landscape, including languages such as Hindi and Punjabi, with its large language models.
“That’s something that down the line will be super important for the Indian consumer market,” Mensch concluded, underscoring the long-term potential of localized AI solutions.
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