AI-powered outsourcing provides a glimpse of the future

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 realize AI’s potential, organizations must 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 is gradually transforming service delivery models across industries.

Insourcing and GICs are surging as organizations rebalance their talent ecosystem

The future of talent sourcing lies in a balanced approach across sourcing models. Organizations are rethinking their talent strategies to gain more control and build strategic capabilities internally. Insourcing is on the rise and Global In-house Centers (GICs) are regaining momentum. Many organizations 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 achieve strategic flexibility, optimize costs, and enhance service delivery.

Outsourcing delivery models continue to mature, with a growing emphasis on value-based relationships

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

Mastering the complexity in talent sourcing is imperative for future-ready organizations

As organizations adapt to a multidimensional talent landscape, they 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” becomes critical for organizations. Expanding the remit of Vendor Management Office (VMO) to manage the entire extended workforce is a pathway to systematically manage the growing complexity of sourcing.