LevelFive has launched in Newcastle as an AI-focused digital product studio, based by former hedgehog lab executives Sarat Pediredla and Alan Morris.
The enterprise is coming into the market with a mannequin that rejects the billable hour in favour of fixed-budget software program tasks with outlined outcomes. It says engagements will attain manufacturing inside eight to 12 weeks, with out time monitoring, printed day charges or a junior staffing pyramid.
Pediredla and Morris beforehand served as Chief Govt Officer and Chief Expertise Officer at hedgehog lab. Pediredla co-founded the enterprise and led it for 19 years, whereas Morris spent 20 years in manufacturing software program and, extra lately, labored on agent-based supply in healthcare.
LevelFive is concentrating on mid-market companies and personal equity-backed corporations, arguing that consumers need software program delivered quicker with out compromising high quality. The studio will promote work throughout three service strains: Advise, Construct and Train.
Pricing mannequin
A central function of the launch is a business construction underneath which LevelFive costs for an agreed end result slightly than billing for workers time. It can take in any overruns itself whereas holding any extra margin if software program is delivered extra effectively by way of AI instruments.
The strategy displays a broader debate within the know-how companies sector over whether or not AI can materially change the economics of software program improvement. Consultancy and company teams have historically relied on day charges and time-based billing due to the uncertainty concerned in customized software program tasks.
Pediredla mentioned purchasers have lengthy requested for a distinct association.
“Mid-market purchasers have been asking for fixed-price outcomes for so long as now we have been promoting them digital companies. Our business has all the time mentioned no, as a result of the uncertainty and threat of constructing software program made mounted costs not possible to decide to,” mentioned Sarat Pediredla, Co-Founder and Operator, LevelFive.
“AI-native supply is what lastly adjustments that. We will ship in eight to 12 weeks what used to take six months, value the end result as a substitute of the times, and each side come out higher. That isn’t a marginal enchancment, it’s a completely different enterprise. I’ve not seen a business opening this clear in 20 years.”
AI brokers are embedded in each engagement slightly than offered as a separate service. LevelFive additionally runs its business and supply again workplace on an in-house working system known as Helix.
Wider market
LevelFive arrives as traders, software program teams and consultancies attempt to perceive how AI brokers would possibly have an effect on the companies financial system. The corporate pointed to estimates from McKinsey International Institute that AI brokers might perform duties accounting for 44% of US work hours at present functionality, whereas AI and robotics collectively might create about USD $2.9 trillion in annual US financial worth by 2030.
It additionally cited Sequoia Capital’s view that the addressable companies market reshaped by AI may very well be price as a lot as USD $10 trillion. The argument is that a lot of the spending at stake would come from labour budgets slightly than conventional software program budgets.
One other knowledge level got here from Salesforce, which reported in late Could that agent-based AI instruments elevated the worth of code shipped by its engineers by 151% over a 12 months and helped one crew full a migration estimated at 231 person-days in 13 days.
Supporters of this view argue that cheaper software program manufacturing will improve, slightly than cut back, demand for software program. That might echo the Jevons paradox, the financial principle that effectivity good points can result in larger total consumption.
Founder view
Morris mentioned the shift will change the steadiness between human judgement and machine execution in engineering groups.
“AI is the subsequent generational shift in know-how after cloud and cellular,” mentioned Alan Morris, Co-Founder and Engineering Lead, LevelFive.
“A senior engineer’s worth is in figuring out what to construct and the right way to construct it, gained by way of years of expertise fixing issues throughout domains. Brokers multiply that have to unlock a step change in each productiveness and high quality, letting two senior engineers ship quicker than complete groups as soon as did. The attention-grabbing questions transfer up the stack: which selections belong to a senior human, which belong to an agent. That’s the alternative for builders who be part of us, and for the purchasers we ship for.”
Pediredla additionally argued that AI ought to now be handled as a part of commonplace supply slightly than as a stand-alone supply.
“Itemizing ‘AI implementation’ as a service in 2026 is sort of a carpenter itemizing ‘utilizing instruments,'” mentioned Pediredla.
LevelFive is headquartered in Newcastle and has senior associates throughout the UK. Its launch provides to indicators that smaller specialist corporations are attempting to make use of AI to problem established consulting and digital product improvement fashions constructed round bigger groups and time-based billing.