The digital workforce, consisting of AI-enabled workers and automation bots, is emerging as a distinct talent model. Of surveyed executives, 83% are leveraging AI as part of their outsourced services (AI-powered outsourcing) and 20% are already developing strategies to manage these digital workers. Despite high interest, tangible benefits such as productivity gains or cost reductions have been limited due to challenges in governance and contracting for AI requirements. To fully realise AI’s potential, organisations should collaborate closely with vendors, establish robust AI governance, develop comprehensive digital workforce strategies and identify and implement AI use cases. The increasing integration of AI into outsourcing can gradually transform services delivery models across Industry.

• 25% of executives are seeing reductions in vendor services costs or improvement in services quality.
• 20% of executives are already building a digital workforce strategy for their AI and automation bots.

The future of talent sourcing may lie in a balanced approach across sourcing models. Organisations are rethinking their talent strategies to gain more control and build strategic Capabilities internally. Insourcing is on the rise and Global In-house Centres (GICs) are regaining momentum.  Many organisations are adopting innovative models like Build, Operate, Transform and Transfer (BOTT) to streamline GIC implementation. This trend reflects a balanced approach, combining outsourcing, insourcing and GICs to help achieve strategic flexibility, optimise costs and enhance Services delivery.

• 70% of executives have selectively insourced scope that was previously with a third-party over last 5 years.
• 78% of organisations Survey are leveraging Global In-house Centres (GICs) today.

Despite increases in insourcing, investments in third-party outsourcing continue to grow. While back-offices outsourcing remains common, organisations may increasingly focus on front-offices and core capabilities like sales, marketing and R&D to unlock incremental value. Outcome-based delivery models have increased in adoption in favour of results-driven relationships. Skilled talent and agility join cost reduction as key drivers for outsourcing.

• 80% of executives are planning to maintain or increase investment in third-party outsourcing.
• 50% of executives used outsourced services for front-offices capabilities (sales, marketing, R&D).

As organisations adapt to a multidimensional talent landscape, they may face challenges due to the maturity of their internal governance and management capabilities. With different sources to access talent, capabilities and skills, defining and holistically managing the “extended workforce” can be critical for organisations. Expanding the remit of the Vendor Management Offices (VMO) to manage the extended workforce may be a pathway to systematically manage the growing complexity of sourcing.

• 20% of executives report that their traditional VMO owns the extended workforce strategy.
• 70% of executives reports that their VMO function is not fully mature.