AI is changing IT outsourcing faster than most contracts can
Imagine a scenario where a major IT outsourcing agreement renewal is approaching. The familiar questions come up quickly: should we continue with the current provider, renegotiate the scope or test the market?
However, there is a question that deserves its time in the spotlight: what should the work itself look like by the time the contract ends?
AI is changing the economics of IT operations. Digital workers can already interpret requests, work across systems, diagnose issues and carry out defined actions. Their capabilities will continue to develop during the lifetime of outsourcing agreements being negotiated today.
Yet many sourcing models still reflect a traditional world where delivering more IT services requires more human capacity. Providers bring people and expertise, contracts define responsibilities and service levels, and commercial models are often closely connected to volumes and effort.
That creates a growing mismatch between the way IT is sourced and the way IT can increasingly be delivered.
Start with the work, not the supplier
When an outsourcing agreement renewal is coming up, it is tempting to begin with the existing service. How many people are needed? Which activities are in scope? What service levels should we demand? What do we expect the provider to charge?
AI makes it worth starting somewhere else.
Take an IT service that currently requires people to receive requests, investigate problems, coordinate work across systems and escalate more complex cases. Some of that work could already be handled by digital workers. Recurring incidents could increasingly be predicted or prevented. Specialists could spend less time resolving familiar issues and more time improving the service itself.
Once the work changes, the sourcing requirement changes with it.
Therefore, leaders need to form a view of the future operating model before deciding how to source it. Which work should become autonomous? Where does human judgement create the greatest value? Which capabilities should remain within the organisation? Where can a partner bring expertise, scale or technology that would make little sense to build internally?
These questions lead to a very different sourcing conversation.
Digital workers also change what it means to own an IT capability
Traditional outsourcing has largely been built around human capability. The provider supplies expertise and capacity, and when the relationship changes, people and responsibilities can be reorganised accordingly.
A digital workforce creates a more complicated ownership question.
The capability of a digital worker can reside in its instructions, workflows, integrations, data access and the organisational knowledge accumulated around it. Over time, these can become an important part of how the organisation operates.
Leaders should understand where the ownership of such assets sit and what happens to them when a sourcing relationship changes.
This does not mean organisations should build and operate everything themselves. Partners will remain essential in the AI era. Their expertise may become even more valuable as technology and operating models evolve.
The strategic question is which capabilities the organisation needs to control to keep evolving.
A good sourcing relationship should make the customer more capable over time.
The economics of the relationship need to evolve too
Autonomous IT also challenges some familiar success measures.
IT organisations have spent years improving how quickly incidents are resolved and how efficiently requests are handled. Providers have organised their operations accordingly. AI creates an opportunity to go further. A digital worker may resolve a recurring incident without human involvement, while predictive capabilities can help identify the problem earlier. Eventually, the organisation may be able to remove its cause altogether.
The greatest value then comes from work that disappears.
This creates an interesting question for outsourcing models built around human effort or service volumes. Both the customer and the provider need commercial incentives that support automation, prevention and continuous improvement, so both benefit when the amount of manual work decreases.
This changes the role of a partner as well. The strongest partners will increasingly help customers redesign work, build reusable digital capabilities and improve the operating model continuously, rather than simply deliver the existing service more efficiently.
Don’t wait until procurement starts
These decisions take time because they reach beyond technology. They affect people, processes, responsibilities, governance, ownership and the relationship between internal teams and external partners.
That is why the conversation should begin before the next procurement process.
Start with the outcomes your business needs and followed by the role IT should play in delivering them. Then consider how people and digital workers could work together, which capabilities the organisation needs to own and where partners can create the greatest value.
The sourcing model can follow from these decisions.
AI is moving much faster than traditional outsourcing cycles. A contract signed today may still be shaping how IT operates several years from now, during which digital workers will become increasingly capable and autonomous.
The next sourcing decision is much more than provider selection or negotiating better commercial terms. It is an opportunity to decide what kind of IT organisation you want to build.
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AI makes it easier to build, but that makes choosing harder
Who benefits from AI: your company or your service partner?
