Outsourcing in the age of gen AI: Why it's time for a new approach

Traditionally, outsourcing has focused on two things:

1. Making everyday operations cheaper
2. Funding transformation with the support of specialists

Ideally, enterprises would do both. But when the cloud revolution hit hard, business and technology leaders doubled down on transformation. And because of limited budgets, they diverted spending from everyday operations.

The result? Outsourcing partners began to build new and innovative business models – on top of a museum of underfunded technology.

Plastering over problems

In other words, outsourcing used to be about ignoring the messy garage of legacy infrastructure. You don't want to look at it, let alone tidy it. Instead, you close the door and find a new home for new business models.

Unfortunately, ignoring a problem doesn't make it go away.

And let's not forget – a business needs to act with agility to stay relevant. When new technologies emerge, businesses that can integrate them into existing infrastructure will be the ones that thrive. Think of generative AI – enterprises must get the data right for it to work, but many are still grappling with a mess of legacy technology.

Outsource and transform

When it comes to outsourcing, my team takes a different approach. We think about it in two phases – outsource, then transform. This means you deal with existing technology first to make space for new and exciting things.

We break down this approach into five stages:

1. Optimize: The outsourcing cleanup operation begins here. We do what you do but make it better by applying industry best practices
2. Accelerate: Once things are tidier, we identify opportunities for improvement. We centralize and improve processes for a faster time to market and competitive advantage
3. Modernize: Now, we're ready to transform. We look at replatforming, workflow design, and automation to free up employees to focus on higher-value work
4. Reimagine: Entering new markets? Launching new products? Introducing new policies? The possibilities are endless now that we've alleviated technology debt and are leaning into a software-as-a-service strategy
5. Innovate: Any transformation needs to be continuous and futureproof. We'll help you grow, scale, and adapt – the bigger the impact, the bigger the benefit

Whether you're experimenting with innovative tech or optimizing existing solutions like ServiceNow, Salesforce, or SAP, our approach improves the old while integrating the new.

Sustainable success

Our outsource and transform approach is built on the belief that business innovation should be sustainable.

Take this example from a leading technology company. The company dominated its market and was quite content with its position. Until it realized it had reached its peak – never ideal in the eyes of stakeholders and investors.

Meanwhile, its competition was agile, brave, and adventurous. They were nimble startups with clean data ready to embrace gen AI and other emerging technologies – without the burdens of legacy infrastructure.

To remain relevant, we guided the business through the five stages of outsource and transform. We even confronted the company's fear of new technologies like gen AI by showing how employees could use it to decipher thousands of lines of code from its legacy systems. The more readable code empowered business leaders to identify opportunities for the modernize, reimagine, and innovate phases.

Today, the company has left its limitations in the past. And it is ready to adapt, rise, and thrive above its competition.

No time like the present

Enterprises are eager to tap into the power of gen AI and other emerging technologies but must avoid making the same outsourcing mistakes they made with cloud.

Gen AI can't be the shiny new thing getting all the attention at the expense of existing tech gathering dust. Instead, enterprises must start the cleanup operation – following an outsource and transform approach – to embed gen AI into the heart of the enterprise.

If you repeat the outsourcing mistakes of the past, you'll be surprised at how quickly your competitive edge will falter in the future.