Rewriting the outsourcing playbook | AI, automation, and platforms

Traditional outsourcing created an industry by managing people and processes. But it’s technology that is now upending that long-standing model.

As the speed and complexity of business increases, company leaders want more from their outsourced services—especially access to leading technologies that improve productivity without expanding costs. A new class of outsourcing providers is stepping up to meet that demand. They’re delivering game-changing capabilities through embedded AI and automation-first operating models that go well beyond transactional execution.

This paradigm shift is fundamentally reshaping outsourcing: how services are priced, how performance is measured, and how deals are structured. The impact is already taking shape. In just two years, traditional outsourcing—providing people to manage processes—is expected to fall from 55 percent to 37 percent of service delivery. At the same time, software-based delivery is forecast to more than double, from 14 percent to 30 percent.¹ The model that once defined globalization is being overtaken by one built for speed, scalability, and technology-enabled services.

This isn’t a gradual evolution, but a wholesale change in how outsourcing creates value. Here’s a closer look at four of the most significant trends driving these changes—and what procurement and transformation leaders need to understand in each area.

Outsourcing has traditionally been a labor and cost strategy: move the work, lower the cost. But that equation is being replaced by one centered on technology. What sets providers apart today isn’t the size of their offshore teams, but the platforms they’ve built, the embedded automation they can put to work, and their ability to deliver AI-enabled efficiencies at scale.

This shift is changing the value curve entirely. Deals are being shaped more by technology accelerators and productivity, and less by headcount. The strongest providers are those who can steadily eliminate work through smart design and technology-driven solutions.

What buyers need to know:

Procurement leaders need to expand beyond labor rates alone and evaluate providers on key drivers like technology, AI, and automation expertise.
Ask providers how they embed technology into delivery—not just what tools they use, but how those tools change outcomes.
Expect pricing models to evolve. Push for commercial terms tied to actual usage and performance outputs, rather than people hours and per-seat costs.
Make sure your internal tech maturity and cybersecurity policies can support tech-driven service models, especially around integration and governance.
Redefine your performance metrics to reflect value delivered through technology.

AI and automation are Ground Zero for outsourcing’s new model. These capabilities are powering transformative changes in the execution layer, where bots, agents, prompts, and AI-enabled workflows are doing more and more of the work that used to require larger teams.

This shift is rapidly playing out—and the pressure to execute on these opportunities is growing. Take AI agents, for example: 9 in 10 companies want to move beyond pilot projects for agents, but 6 in 10 still cite internal skills as a key barrier.² Outsourcing providers are stepping in to fill that gap—delivering not just technology, but AI-enabled operating models that clients can plug into immediately.

As intelligent systems become embedded in delivery, traditional sourcing assumptions break down as value calculations shift from labor inputs to system performance. Oversight requires new contracts, new metrics, and new internal capabilities.

What buyers need to know:

Include AI-specific governance in contracts from the start. Define data usage, training rights, performance standards, and intellectual property terms.
Reframe how you think about delivery models. In many cases, the “team” isn’t headcount—it’s a set of embedded systems running behind the scenes.
Push providers to share responsibility for enablement. You’re not just buying AI—you need a provider who can help your teams work with it effectively.
Confirm that your internal architecture can support intelligent workflows. Even the best agent can’t perform without the right data and systems integrations.
Set performance metrics that reflect automation at scale. Look beyond SLA calculations and Outcome acceptance criteria and consider how AI impacts speed, accuracy, and learning over time.

Outsourcing is shifting from custom builds to ready-made solutions. Providers are now offering productized services built on proprietary platforms—complete with automation, analytics, and compliance baked in.

This shift brings greater speed, scale, and consistency to service delivery. Buyers no longer have to fund bespoke implementations or wait months for results. They can plug into proven tools with preconfigured logic and tested workflows—and get value faster. It’s a new delivery model: part software, part service, and increasingly, a big differentiator.

What buyers need to know:

Ask what platforms or productized solutions the provider brings to the table—and how those reduce complexity or onboarding time.
Understand what’s fixed and what’s flexible. Prebuilt doesn’t mean one-size-fits-all, but there may be tradeoffs.
Evaluate the roadmap. Productized services should evolve, so make sure you’re aligned on where the platform is heading.
Understand the cost drivers of the solutions. Most clients want to own the tools and cloud environment but can quickly lose control service and licensing costs.

As outsourcing becomes more tech-driven, the field of providers is shifting. Traditional players are racing to modernize, while cloud-native firms, platform developers, and specialists in specific service areas are gaining ground.

In many deals, buyers are no longer just choosing between entrenched firms. They’re evaluating emerging players with leading-edge tools, AI-first workflows, and targeted expertise. The “right” provider may be the one with the most advanced delivery model, not the largest team.

What buyers need to know:

Expand your provider lens. Tech-forward specialists may outperform legacy firms in speed, agility, or innovation.
Pressure-test delivery models. Ask how partners build, manage, and scale tech-enabled services—not just who executes the work.
Rethink qualification criteria. Domain expertise still matters, but so does architecture, automation, and the ability to integrate fast.
Update your procurement approach. Current RFP processes may screen out the very providers best equipped for modern service delivery.

Footnotes

¹“Tariffs lit the fuse for bold enterprises to automate,” HFS Research and KPMG LLP, July 2025

² KPMG AI Quarterly Pulse Survey: Q2 2025

Today’s outsourcing model looks nothing like the past. Our new report explores how AI, flexible delivery models, outcome-based engagements, and more are upending long-standing ideas and expectations around outsourced services.

KPMG LLP (KPMG) helps organizations navigate the new era of outsourcing—from strategy and decision frameworks to deal execution, governance, and value realization. Our teams bring deep experience across the sourcing lifecycle and understand what it takes to turn outsourcing into a transformative business capability. We support clients by:

Developing sourcing strategies aligned to transformation goals, talent needs, and delivery models
Designing and executing competitive deal processes, including provider evaluation, contract support, and negotiation
Standing up governance frameworks and operating models for multivendor environments
Embedding innovation, AI, and performance tracking into delivery oversight
Enabling long-term value through business case design, change management, and continuous improvement

Whether you’re optimizing an existing model or designing one from the ground up, KPMG can help you build a more strategic, resilient, and future-ready approach to outsourcing.