AI is reorienting the global economy in radical ways, and the effects are spreading from consumers to companies, says Bill McDermott, CEO of ServiceNow, an enterprise software giant.
McDermott, a veteran of the software industry who previously led European tech giant SAP, chatted with me as his company reported third-quarter results on Wednesday. We spoke about AI disruptions to the job market, the AI spending boom, and the threat of generative AI to the software industry.
The big Amazon layoffs this week have reignited concerns about the impact of this powerful new technology on the job market. McDermott said the economy will certainly undergo fundamental changes due to AI.
“AI is going to reorient the global economy,” he told me in an interview.
Individual consumers have already benefited from this by having access to powerful AI chatbots and models that answer questions in new ways. Next, enterprises, such as companies, governments, and other large organizations, will see gains from this technology, the CEO said.
“This is the biggest breakthrough in enterprise technology in half a century,” McDermott added.
ServiceNow’s hiring plans
For ServiceNow itself, the CEO said generative AI is encouraging the company to hire more in certain areas, while re-skilling existing staff.
“What good is AI if it doesn’t serve the greater good of people?” McDermott said. “We use agents in support of our employees, which enable us to hire more people.”
ServiceNow is hiring “feet on street,” which includes salespeople, architects, designers, and forward-deployed engineers who can help companies set up new AI and other tech projects in weeks, he said.
“And we’re retooling and reassessing the skills of every employee, and retraining people to build the workforce of the future,” McDermott said.
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The AI spending boom
With trillions of dollars being spent on AI infrastructure, I asked the ServiceNow CEO if he’s seeing evidence of gains that would justify such heavy spending.
“Your point you make is right on,” he responded, while saying that most digital transformation projects fail, and 95% of early corporate AI initiatives are not delivering a return on investment.
He said ServiceNow has built its software to help companies handle the complexity of new AI projects.
“Our platform is that single, clean pane of glass that overcomes digital transformation problems,” McDermott said. “It resides above that messy legacy data layer and works across functions and digital processes. No one has time to rip and replace all that legacy mess.”
AI’s SaaS threat
ServiceNow shares have been pressured this year by concern about the potential impact of generative AI. Some investors worry that AI coding tools and similar technology could make it easier for companies to build their own software, rather than buying it from software-as-a-service vendors such as ServiceNow.
When I asked McDermott whether ServiceNow customers are building their own versions of the company’s software, he was unruffled.
“No, they can’t duplicate what they took 20 years to build,” the CEO said.
ServiceNow offers enterprise features for IT, operations, employee, customer experience, and engineering on the same product, he said.
“That is not what OpenAI and Anthropic, or Gemini, do,” he added. “Companies are still running the ServiceNow platform to execute their business missions.”
ServiceNow raised guidance
ServiceNow delivered another strong quarter, raising its full-year outlook as demand for its AI-powered offerings accelerated. The company’s board also approved a five-for-one stock split.
The company reported third-quarter subscription revenue of $3.3 billion, up 22% year-over-year. Revenue reached $3.4 billion, also a 22% increase. ServiceNow raised its 2025 guidance for subscription revenue, operating margin, and free cash flow.
McDermott credited the surge to companies accelerating their adoption of ServiceNow’s AI capabilities. ServiceNow CFO Gina Mastantuono said that AI products, such as Now Assist, Workflow Data Fabric, and RaptorDB, have exceeded internal plans, showing strong uptake across both new and existing customers.
The company highlighted 103 deals worth more than $1 million in net new annual contract value and 553 customers exceeding $5 million.
ServiceNow also highlighted the success of its new AI Experience interface and the Zurich product for building scalable AI systems.
The company’s investments in AI innovation and partnerships, spanning Nvidia, FedEx, and government agencies, show deepening integration of AI into enterprise workflows.
Sign up for BI’s Tech Memo newsletter here. Reach out to me via email at abarr@businessinsider.com.
