India Leading Global Outsourcing Expansion; AI, Automation Chipping In: Deloitte Report

India’s outsourcing landscape is undergoing a significant transformation, with 81% of organisations planning to increase their outsourcing efforts over the next three to five years, according to Deloitte’s latest report. This shift is driven by the need for technological advancements, access to specialised expertise and cost efficiency. 

India is a preferred outsourcing destination due to its expanding services sector, reliable business environment and strong policy framework. India’s expertise in digital transformation, cybersecurity and vendor management has positioned it as a scalable and secure outsourcing hub.

The report indicates that strategic supplier collaborations have enabled organisations to achieve an average annual cost savings of 10-25% from their outsourced contracts. Organisations balancing strategic service providers and niche providers have achieved even higher savings of 15-35%. As outsourcing engagements become more complex, organisations are strengthening their vendor management strategies, with 45% of mature outsourcing firms now operating dedicated vendor management offices to enhance governance, supplier risk management and outsourcing effectiveness.

Organisations are moving beyond traditional transactional and back-office services to higher-value, strategic services. AI and automation are playing an increasingly role in outsourcing agreements, with 98% of organisations depending on service providers for AI and gen AI capabilities.

To optimise these collaborations, companies are embedding AI-specific clauses in outsourcing contracts, ensuring better performance tracking, cost optimisation and risk mitigation. This shift has led to a rise in outcome-based contracts, now preferred by 36% of organisations over traditional full-time equivalent contracts.

The report highlights that better alignment with business strategy (28%) has overtaken cost savings as the primary driver for outsourcing. This transition is fuelled by advancements in AI, automation and digital transformation, which enable organisations to outsource complex functions such as product development, supplier evaluation and strategic brand management.

Outsourcing models are evolving to include a blend of global business services centres, third-party providers and flexible talent solutions. According to the report, 55% of organisations use GBS centres for governance and oversight while relying on third-party providers for execution and efficiency optimisation.

Additionally, 35% of organisations have adopted the build-operate-transfer (BOT) model, which enables them to scale capabilities while maintaining long-term operational control. These models offer businesses greater agility, cost efficiency and integration between IT and business functions.