USA - NATIONWIDE: An Introduction to Outsourcing

Amidst a global trade environment  with increasing economic protectionism and geopolitical risks in supply chains, outsourcing remains a viable, fundamental business strategy for companies seeking talent and the transformation of business operations by leveraging the convergence of AI and cloud strategies as well as a reduction in operating costs. This introduction highlights the top 5 trends impacting outsourcing in 2025.

Geopolitical Uncertainty and Deglobalization of the Supply Chain

The COVID-19 pandemic exposed vulnerabilities in the global supply chain. Now an increasingly protectionist global trade environment and rising geopolitical tensions are accelerating shifts in the global supply chain for tangible goods, including outsourced contract manufacturing. Rapid changes in the United States’ approach to tariffs as a tool to rebalance global trade and the retaliatory responses of impacted countries will continue to challenge supply chains and the sourcing strategies for companies, including derisking supply chain vulnerabilities through friendshoring (outsourcing using providers in friendly allied countries) and reshoring (shifting operations back to the home country). At the same time, US immigration policies may require companies to prioritize outsourcing over insourcing as an effective business strategy given already tight labor markets in the US. In the area of national security, the US government’s evolving policies on technologies such as AI, data centers, and energy demand a watchful eye for any impact on outsourcing providers and their customers who seek to consume those technologies and services on a managed basis.  

Outsourcing on the Rise – Rebalancing Real Estate Portfolios

While geopolitical tensions mostly impact the supply chain for tangible items, the outsourcing of business processes and technology operations seems to be immune with no slowdown in sight and no current policy initiatives on the table that would require a retreat. One area with significantly increased activity is the outsourcing of real estate operations such as facilities management (FM) (eg, cleaning, security, and maintenance services), leasing administration, transaction management (ie, brokerage) and construction/project management.

Following the pandemic, companies have been rebalancing their real estate portfolios and seeking flexible solutions to accommodate changing space requirements, driven by the rise of flexible workspaces and ongoing debates around return-to-office (RTO) policies. The outsourcing of these operations can incorporate pre-defined mechanisms for scaling services up or down, offering greater agility compared to adjusting in-house capabilities and absorbing related fixed costs.

Additionally, there is a growing emphasis on enhancing the “workplace experience” to attract employees who might otherwise prefer remote work, a trend accelerated by the widespread adoption of work-from-home (WFH) arrangements during and after the pandemic. Leading facilities management providers can offer a suite of ancillary services, including occupancy planning, project management and space utilization analysis supported by benchmarking data, to help companies achieve these ambitious goals.

Finally, there is a greater emphasis on “integrated” FM (IFM) by leveraging people, process and most importantly technology. Broader technological advancements, including artificial intelligence (AI) and the Internet of Things (IoT), are fueling the rise of “Intelligent Facilities Management”. This emerging trend leverages technology and data to drive operational efficiencies and support sustainability objectives, such as the operation of “healthy buildings”. Bundling these innovative, technology-driven services with traditional facilities management offerings can be particularly attractive for companies aiming to streamline their supplier base and realize economies of scale, while avoiding the need to engage additional third-party technology providers.

Global Capability Centers – BOTs are Hot Again

Years ago, global capability centers (GCCs) were the rage. Then companies went through a wave of selling their GCCs to outsourcing providers. Now, despite geopolitical uncertainties, GCCs are back in vogue, albeit mostly in India and other friendly allied nations. Companies are increasingly seeking to access talent outside their home countries and the associated reduced cost benefits for that talent by establishing GCCs. While a small number of companies have elected the DIY approach, many companies are working with either firms specializing in the establishment of GCCs or traditional outsourcing providers who will build and operate a global capability center for the company and later transfer the operation of the GCC to the company under a model commonly referred to as a “BOT” (build-operate-transfer). Permanent establishment, tax and co-employment risks, among others, require careful consideration when considering how to establish a GCC.

Agentic AI, Robotics and the Evolution of the Hybrid Workforce

The outsourcing landscape is being redefined by the rise of AI in general and now agentic AI – specialized autonomous software agents capable of executing complex tasks with minimal human supervision – is expected to accelerate the shift from a carbon labor (ie, human) workforce to a digital labor workforce, where AI agents are no longer just tools and instead are integral contributors to enterprise workflows. As adoption of agentic AI and robotics accelerates, organizations are reengineering how work is decomposed, distributed, and delivered. Procurement and legal teams are responding by building internal taxonomies of AI capabilities, aligning them with workflows, and redesigning contracts to reflect new forms of digital labor including robotics, while adapting to emerging pricing models. One challenge for these new hybrid workforce models, which combine employees, contingent labor, AI agents and robotics, is that organizations will need to establish clear role definitions, escalation protocols, performance metrics, and evolving governance frameworks that emphasize lifecycle oversight, stakeholder accountability, and continuous improvement. Sourcing teams should prioritize resilience, auditability, and responsible safeguards, especially as preview-phase tools and bundled AI services introduce enhanced risk complexities. As AI and robotics scale, organizations will continue to rely on humans for more complex tasks, while success ultimately will depend on how effective agentic AI and robotics are integrated into a human-centric strategy that elevates creativity while leveraging the speed, agility and scalability of these technologies in a responsible manner.

Critical XaaS Offerings – Outsourcing v Service/License Models

Cloud, software and other as-a-service (XaaS) models are pervasive in the technology solutions offered to companies today; however, contracting for these services remains relatively immature in the marketplace due in large part to their origin as on-premise software solutions.

As companies make the transition from their legacy on-premise solutions or otherwise transition away from in-house applications to the cloud or other XaaS models, they have increasingly become reliant on the providers of these solutions, especially those that support a company’s most critical operations (eg, ERP-in-the-cloud). From an operational resiliency standpoint, there is a fundamental tension in the market between providers who purport that these solutions resemble a more traditional on-premise technology purchase and customers (and their regulators) who view these solutions akin to an outsourcing transaction – both in structure and approach to risk mitigation.

Similar to a traditional outsourcing model, customers are entrusting the ongoing delivery of critical functions to a third-party provider. From a procurement perspective, customers are using more standardized outsourcing frameworks, like RFPs, transition planning, and governance, to deal with adoption of these offerings and the accompanying risk mitigation required for the associated investment. From a contracting perspective, customers expect terms similar to those commonly recognized for outsourced services, not just in risk allocation, termination, and exit management but also service levels and data protection and security terms.

Given that AI will accelerate the demand for cloud/XaaS offerings to support a customer’s critical business operations, the market would greatly benefit from a recognition that operational resilience is critical to delivering sustained business value and that customers expect to manage cloud and other critical XaaS solutions with the same rigor as an outsourced service. By reframing how these deals are approached, both customers and providers can move past this apparent friction to focus on maximizing long-term business value with the benefit of enhanced operational resilience.

Takeaways

Despite geopolitical uncertainties, the outsourcing market remains vibrant, fueled by shifts to friendlier shores amidst seemingly tight domestic labor markets for required talent and the accelerating demand for AI, robotics and cloud/XaaS solutions to remain competitive.