BPO firms outpace IT giants as AI drives double-digit growth: analysts
NEW DELHI, INDIA — Despite macroeconomic headwinds and AI disruption fears, pure-play business process outsourcing (BPO) firms like Firstsource, Genpact, and EXL are posting double-digit growth, outpacing traditional IT services giants.
Analysts attribute their resilience to annuity-based revenue models, aggressive AI adoption, and a shift toward outcome-based pricing—factors that insulate them from client spending cuts.
BPO firms thrive on annuity revenue and AI adoption
Unlike IT services firms, which rely heavily on discretionary client spending, BPO companies generate steady income from long-term, process-driven contracts.
Firstsource Solutions, for instance, reported $944 million in fiscal year 2025 revenue—a 23.4% yearly jump—while projecting between 12% and 15% growth for fiscal year 2026.
This stability has helped mid-cap BPOs like EXL, with 12.5% growth, and Genpact, with 6.5% growth, outperform IT majors struggling with single-digit gains.
AI adoption is further fueling efficiency. Phil Fersht of HFS Research notes that BPOs are better positioned to exploit AI due to their data operations. Firstsource’s 14 large deals in fiscal year 2025, each worth over $5 million annually, were driven by domain expertise and automation.
While AI may reduce headcount dependency over time, firms like Genpact, with its 142,900 employees, and EXL, with its 60,652 employees, continue expanding, suggesting a hybrid human-AI workforce strategy.
Outcome-based pricing and agile scaling define success
BPO leaders are pivoting from hourly billing to outcome-based models, aligning costs with client results rather than labor hours.
Firstsource’s $1 billion run rate positions it as a disruptor, large enough for enterprise deals but agile enough to innovate, per Bank of Baroda’s Girish Pai.
However, balancing growth with pricing shifts remains a challenge. HFS Research’s Fersht cautions that outcome-based contracts introduce revenue unpredictability, even as firms invest heavily in AI.
“But this hypergrowth comes with high stakes. Scaling headcount while shifting to outcome-based pricing is a balancing act—one that introduces revenue unpredictability just as Firstsource is making massive bets on AI and workforce transformation,” Fersht said.
Yet, experts like Everest Group’s Peter Bendor-Samuel argue that early AI adopters will offset cannibalization effects with higher profitability, saying that the more AI you embed, the greater the profit potential.
