AI Is Rewriting The Economics Of Outsourcing

For more than three decades, outsourcing has rested on a simple economic idea: If work can be defined, standardized, monitored, and moved to a lower-cost labor market, someone else can often do it more cheaply.

That idea no longer works.

Generative AI is not just helping programmers write code faster or customer service agents answer questions more efficiently. It is changing the build-vs-buy logic for categories of work that companies once sent to third parties as a matter of course. The effect is showing up first in IT services, where the work is digital, measurable, and increasingly readable by machines. But the same logic applies, and the same trend is appearing, across finance, HR, procurement, customer operations, legal support, claims processing, analytics—indeed, most forms of business process outsourcing (BPO).