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The AI Effect: Software Development

Ryan Frederick | March 19th, 2024 | Dublin,Ohio

AI Robot

Software development will never be the same; the same can be said for many other professional domains. At Transform Labs, we embrace AI development as a primary aspect of writing code for new products. AI will transform many aspects of work, and software development is at the front of the line. We are leaning into it because of the impact and value it can have for us and our clients.

Soon, AI development agents will write the bulk of new code for new software products. It will take longer for AI development agents to write substantial code to evolve existing products because of the context needed around how and why current code does what it does.

AI development agents will need to be managed and instructed by human development leaders. Still, rather than just being copilots working alongside developers, AI development agents will write code more as peers to human developers. A human developer will lead a team of AI development agents that can produce substantially more code faster than an entire team of human developers.

We are already seeing:

  • Increases in volume and velocity — We’re experiencing a 20–30x increase in the amount and pace of code development. AI development agents can write code 24/7 if asked to do so.
  • ROI — The increase in the development pace substantially reduces costs, drives financial value, and saves time. This will only continue to accelerate.
  • Accuracy — Leveraging AI for core development produces more accurate code that requires less testing and review, contributing to faster production time and lower production costs.

We’ve historically avoided offshoring development because we weren’t comfortable trading cost for quality. Generative AI has changed that equation. We no longer have to give up one for the other. AI development agents can and are writing code faster and, in many cases, better. Is AI replacing developers? Yes, to a degree. A set of work that previously would have needed 3–4 developers now requires one. The ratio of AI development agents to developers will continue to increase with ratios of 1:10 or 1:20, not far off.

What does this mean for our clients? Whether you are a startup, a mid-market company, a non-profit, or a large enterprise, we now produce working code faster and for a significantly lower investment than previously. Leveraging AI development allows clients to create new products faster and less expensively.

What does this mean to the broader landscape of software development?

  1. Yes, it means some development jobs will be displaced. Mid-level developers are at the highest risk because they will cost substantially more than an AI development agent, especially when considering the volume and velocity of code production, without the skills and experience to lead AI development agent teams.
  2. As a result of the above, companies that rely on a substantial number of development contractors from IT staffing firms will be able to reduce their dependency, and many of the contracting positions will disappear. The role and value of predominantly IT staffing firms will be negatively impacted, causing most to adjust and many to go out of business. Providing a person to crank out code will become an unsustainable approach and business model.
  3. With code writing becoming the bastion of AI development agents, humans’ value won’t be in code production but in architecture, governance, and the leadership to bring it all together. After all, humans doing what humans are best designed and capable of doing seems most appropriate.

Software development has become a substantial profession and industry. About 4.5 million software developers are estimated to work in the U.S. alone. But what happens when only a third are needed because of AI development agents? This question will be asked numerous times over the next few years as AI reshapes practically every aspect of our work. Software development is the beginning of a tsunami of AI reshaping how work gets performed.

AI will democratize many things, and software development is one of them. We embrace it rather than fight it or ignore it to hang on to legacy beliefs and working methods. Part of our reason for rebranding to Transform Labs was to better represent our transformative work with clients and our clients’ transformation. Transformation is about being willing to evolve and change from one state to another. AI development as a core function of our client service will only increase, providing more value and allowing our clients to progress faster on their transformative work.