India drives next phase of global outsourcing growth: Deloitte
NEW DELHI, INDIA — India is set to lead the next wave of global outsourcing as organizations worldwide plan to increase outsourcing efforts.
According to a recent Deloitte report, 81% of organizations are expected to expand outsourcing over the next three to five years. This growth is attributed to advancements in technology, access to specialized expertise, and the pursuit of cost efficiencies.
The report reveals a significant shift in priorities, with better alignment with business strategies (28%) now surpassing cost savings as the primary driver for outsourcing. Companies are moving beyond traditional back-office services, outsourcing high-value strategic functions like product development and supplier evaluation.
India’s role as a transformative outsourcing hub
India’s outsourcing sector is undergoing rapid transformation, supported by its thriving start-up ecosystem and focus on upskilling.
Yatin Patil, Partner at Deloitte India, stated, “Supported by a thriving start-up ecosystem and continuous upskilling initiatives, India is shaping the future of outsourcing by driving cost efficiency and innovation.”
As India is projected to become the world’s third-largest economy by 2027, it remains a preferred outsourcing destination. The country offers a reliable business environment, strong policy frameworks, and expertise in digital transformation. Its expanding services sector further cements its position as a scalable and secure outsourcing hub.
AI and hybrid models reshape outsourcing strategies
The integration of AI and automation is redefining outsourcing agreements. Nearly 98% of organizations rely on service providers for artificial intelligence (AI) and Generative AI (GenAI) capabilities. Many firms are embedding AI-specific clauses in contracts to optimize performance tracking, cost management, and risk mitigation.
Hybrid sourcing models are also gaining momentum. About 55% of organizations now combine global business services (GBS) centers for governance with third-party providers for execution. Additionally, 36% of companies have shifted to outcome-based contracts over traditional full-time equivalent (FTE)-based models, reflecting a preference for value-driven collaborations.
Cost savings and governance drive growth
Outsourcing continues to deliver substantial cost savings, with nearly 90% of organizations reporting annual reductions of 10–25%. Some companies achieve up to 35% savings by leveraging strategic vendor mixes. To enhance governance and supplier risk management, 45% of mature firms have established dedicated vendor management offices (VMOs).
As global outsourcing evolves, India remains at the forefront with its skilled workforce, innovative solutions, and robust infrastructure. These factors position the country as a cornerstone for businesses aiming for long-term sustainability and efficiency in their operations.
