A recent Deloitte report titled “The outsourcing compass: Decoding strategies of today” reveals that India’s outsourcing landscape is undergoing a significant transformation.
According to the report, about 81 percent of organisations plan to increase their outsourcing efforts over the next three to five years.
This shift is driven by the increasing need for technological advancements, access to specialised expertise, and cost efficiency.
With India set to become the third-largest economy by 2027, the country is reinforcing its position as a key hub for outsourcing and advanced service functions.
Deloitte Report: Cost Savings, Strategic Vendor Mix, AI and Automation
Nearly 90 percent of organisations report annual cost savings of 10–25 percent from outsourcing, with some achieving up to 35 percent savings through a strategic mix of vendors.
The use of multiple vendors allows companies to optimise costs while gaining access to new-age technologies and innovative solutions.
This approach not only drives cost efficiency but also ensures that organisations remain competitive in the global market.
The nature of outsourcing is shifting, with organisations moving beyond traditional transactional and back-office services to higher-value, strategic services.
AI and automation are playing an increasingly crucial role in outsourcing agreements, with 98 percent of organisations depending on service providers for AI and GenAI capabilities.
To optimise these collaborations, companies are embedding AI-specific clauses in outsourcing contracts.
These clauses ensure better performance tracking, cost optimisation, and risk mitigation, leading to a rise in outcome-based contracts preferred by 36 percent of organisations over traditional FTE-based contracts.
Alignment with Business Strategy and Hybrid Sourcing Models
The report highlights that better alignment with business strategy (28 percent) has overtaken cost savings as the primary driver for outsourcing.
This transition is fuelled by advancements in AI, automation, and digital transformation, enabling organisations to outsource complex functions such as product development, supplier evaluation, and strategic brand management.
This alignment allows companies to focus on their core competencies while leveraging external expertise for specialised tasks.
Outsourcing models are evolving to include a blend of Global Business Services (GBS) centres, third-party providers, and flexible talent solutions.
According to the report, 55 percent of organisations use GBS centres for governance and oversight while relying on third-party providers for execution and efficiency optimisation.
Additionally, 35 percent of organisations have adopted the Build-Operate-Transfer (BOT) model, enabling them to scale capabilities while maintaining long-term operational control.
These models offer businesses greater agility, cost efficiency, and seamless integration between IT and business functions.
Deloitte Report: Geopolitical Stability and Vendor Management
While geopolitical stability remains a key consideration for outsourcing decisions, India continues to be a preferred destination due to its expanding services sector, reliable business environment, and strong policy framework.
Despite global uncertainties, 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 percent from their outsourced contracts.
Organisations balancing strategic service providers and niche providers have achieved even higher savings of 15–35 percent.
As outsourcing engagements become more complex, organisations are strengthening their vendor management strategies, with 45 percent of mature outsourcing firms now operating dedicated Vendor Management Offices (VMOs) to enhance governance, supplier risk management, and outsourcing effectiveness.
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