For decades, the global IT services industry has thrived by helping enterprises outsource tasks like customizing, integrating, and maintaining complex software systems. Giants like Infosys, Tata Consultancy Services, and Wipro built billion-dollar empires on this model, employing hundreds of thousands of engineers to manually handle code changes, system upgrades, and platform migrations. Now, Vishal Sikka, the former chief executive of Infosys, is betting that artificial intelligence can do much of that work more efficiently — and his new startup, Hang Ten Systems, is poised to challenge the very foundation of the sector.
Hang Ten Systems emerged from stealth on Wednesday, announcing a $32 million seed funding round led by Mayfield, with strategic participation from Aramco Ventures and a group of angel investors. The startup's board includes Jerry Yang, co-founder of Yahoo, lending early credibility to the venture. Sikka, 59, is no stranger to enterprise software; he spent 12 years at SAP, rising to the role of executive board member, and later served as CEO of Infosys from 2014 to 2017. After leaving Infosys, he founded VianAI, an enterprise AI and analytics startup that raised $190 million before pivoting. Now, with Hang Ten, Sikka is aiming directly at the heart of the IT services industry.
The AI-Native Approach
Hang Ten describes itself as an enterprise AI services company. Unlike traditional IT services firms that rely on large teams of developers, the startup uses AI-driven development and automation to help enterprises continuously build, modify, and operate software. This includes agentic code generation — where AI agents autonomously write and refine code — combined with reusable AI skills and deep domain expertise. The goal is to reduce the time and cost of software delivery while improving quality.
"Traditional services scale linearly with headcount," said Navin Chaddha, managing partner at Mayfield, in an interview. "Hang Ten is built so its leverage grows with every project." This nonlinear scaling is key to the startup's value proposition. Each project adds to the library of AI skills and models, making subsequent engagements faster and cheaper. Chaddha noted that the company "just got started a month back" and already has customers — a testament to both Sikka's reputation and the market's hunger for AI alternatives.
Among those early customers are Siemens Gamesa Renewable Energy and Fresenius, two large industrial and healthcare companies. In a blog post announcing the venture, Sikka wrote that Hang Ten is already helping enterprises "hang ten on the biggest wave of our lifetimes," a surfing metaphor that echoes the startup's name.
Why This Matters for IT Services
The launch of Hang Ten comes at a critical inflection point for the IT services industry. Analysts at Jefferies argued earlier this year that IT services may be among the first sectors to face meaningful AI disruption. The core of the business — manually integrating enterprise software, writing custom code, and maintaining legacy systems — is precisely the kind of repetitive, rule-based work that generative AI excels at. If an AI agent can write a code module in minutes instead of days, the economic model of charging by the hour or by headcount collapses.
Infosys itself has sought to position AI as an opportunity rather than a threat. Chairman Nandan Nilekani said this week that AI could expand the industry's addressable market, and Infosys told investors that "AI-first services" could represent a $300 billion to $400 billion market by 2030. Yet the market remains skeptical: Infosys shares have fallen more than 35% this year amid concerns that AI will compress margins and reduce the need for large offshore teams.
Sikka's move carries added weight because of his history. During his tenure as Infosys CEO, he attempted to shift the company toward automation and AI, launching initiatives like the AI platform Nia. However, internal resistance and strategic disagreements led to his resignation in 2017. Now, free from the constraints of a legacy organization, he is building a company that can fully embrace AI from the ground up.
Sikka's Career and the VianAI Precedent
Vishal Sikka is one of the most prominent figures in enterprise technology to emerge from India. He earned his master's and PhD in computer science from Stanford University, and early in his career worked at Xerox PARC and Sun Microsystems. He joined SAP in 2002 and became the company's first non-German board member, leading the development of SAP HANA, an in-memory database that became a cornerstone of the company's strategy. In 2014, he was appointed CEO of Infosys, where he pushed for innovation and automation. After stepping down, he founded VianAI in 2018, which emerged from stealth in 2019 with $50 million in seed funding. In 2021, VianAI raised $140 million from SoftBank Vision Fund 2, valuing the company at over $400 million. VianAI focused on enterprise AI applications and analytics tools for decision-making. Hang Ten, by contrast, is squarely aimed at the IT services delivery model — actually building and maintaining software rather than just analyzing data.
The early crew at Hang Ten includes several executives who have worked with Sikka for years. CTO Navin Budhiraja, chief design officer Sanjay Rajagopalan, and senior vice president of forward deployed engineering Tao Liu all held similar roles at SAP, Infosys, or VianAI. This deep bench of experience is one reason Mayfield felt confident investing at such an early stage.
How Hang Ten Plans to Scale
Headquartered in the Bay Area, Hang Ten is already hiring across delivery, engineering, sales, and leadership roles. The startup plans to expand to multiple global locations to meet enterprise demand. While Mayfield declined to discuss valuation, the size of the seed round — $32 million — is unusually large for a seed stage, indicating strong investor conviction. Aramco Ventures, the corporate venture arm of Saudi Aramco, adds a strategic dimension, potentially opening doors in the energy sector and the Middle East.
The startup's business model is still evolving, but early signs point to a project-based or subscription approach where customers pay for outcomes rather than hours. Sikka's blog post emphasized that Hang Ten "delivers outcomes, not headcount." This is a direct challenge to the time-and-materials billing model that has defined IT services for decades.
Mayfield's Chaddha noted that the firm has been tracking Sikka for years and decided to back him because of his unique combination of technical depth, managerial experience, and vision. "He understands both the potential of AI and the realities of enterprise deployments," Chaddha said. "Hang Ten is not just another AI startup; it's a rethinking of how software gets built and maintained at scale."
Industry Reactions and the Broader AI Debate
The launch has sparked debate across the tech and business press. Proponents argue that AI will finally enable the long-promised productivity gains in software development, while skeptics point to the complexity of legacy systems and the difficulty of replacing human judgment. Sikka himself has acknowledged that AI will not eliminate all human roles but will augment them, allowing developers to focus on higher-value tasks. Hang Ten's approach seems to blend the two: it uses AI to automate repetitive tasks but retains experienced engineers to oversee the process and handle nuanced decisions.
The timing also aligns with a broader wave of AI-native startups targeting various industries. From legal services to healthcare to finance, entrepreneurs are using large language models and code generation to challenge incumbents. However, IT services is uniquely vulnerable because it has already been commoditized and is heavily dependent on low-cost labor. If Hang Ten succeeds, it could force every major services firm to radically rethink its operating model.
Meanwhile, Infosys and its peers are not standing still. The company has partnered with Anthropic and OpenAI to build AI tools for clients, and it has launched its own platform, Infosys Topaz, an AI-first suite of services. But these efforts are layered on top of legacy structures. Hang Ten, by contrast, was born in the age of GPT-4, and its entire architecture is designed around AI from the start.
As the AI wave continues to reshape enterprise technology, Vishal Sikka's latest bet may prove to be one of the most consequential. With a strong founding team, significant funding, and early customer traction, Hang Ten Systems is well positioned to ride the wave — and perhaps change the landscape of IT services forever.
Source:TechCrunch News