AI may unbundle BPOs, disrupt $300Bn outsourcing industry: analyst
CALIFORNIA, UNITED STATES — The business process outsourcing (BPO) industry faces a significant transformation as artificial intelligence emerges as a powerful disruptive force. The sector, currently valued at $302.62 billion, is projected to reach $525.23 billion by 2030, but this growth trajectory may shift dramatically due to AI innovation, according to an analyst.
Industry giants face disruption
Investing partner Kimberly Tan of Andreessen Horowitz points out that established players like Cognizant, Infosys, and Wipro, each of which generates between $10-20 billion in annual revenue, have long dominated the industry through traditional outsourcing services.
However, she notes that these services frequently struggle with efficiency issues, including delayed response times and accuracy problems.
The AI revolution in action
In her analysis, Tan highlights how modern AI capabilities are enabling companies to reclaim control of their operations. She cites the example of Decagon, whose AI customer support system has achieved “upwards of 80% resolution rates and improved CSAT scores for customers out of the gate.”
The transformation extends beyond customer service, Tan explains. In the healthcare sector, she reports that one organization implementing AI solutions experienced “80% fewer denials on first submissions and 50% time savings on claims processes and billing without an increase in cost.”
Race between AI startups and BPOs
Tan emphasizes that AI-native companies are experiencing unprecedented growth as they target BPO market share.
While these startups are building strong defensive positions through product development, she warns that their window of opportunity isn’t indefinite. She cautions that as AI technology becomes more accessible, traditional BPOs will inevitably develop their own in-house AI solutions to protect their customer base.
While traditional BPO companies are attempting to adapt — with Wipro reporting a 140% increase in AI adoption and Accenture securing $1.2 billion in generative AI projects — Tan argues that their business model presents a fundamental challenge. She explains that their reliance on marking up labor costs by 20-30% makes it particularly difficult for these established players to transition to AI-native solutions.
