India’s outsourcing landscape is undergoing a significant transformation, with 81% of organisations planning to increase outsourcing efforts over the next three to five years, according to Deloitte’s latest report, ‘The Outsourcing Compass: Decoding Strategies of Today’. This shift is driven by the growing demand for technological advancements, access to specialized expertise, and cost efficiency. As India is set to become the world’s third-largest economy by 2027, it continues to strengthen its position as a global outsourcing hub.
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The nature of outsourcing is evolving, moving beyond traditional back-office functions to high-value, strategic services. AI and automation are playing a pivotal role, with 98% of organizations relying on service providers for AI and GenAI capabilities. Companies are embedding AI-specific clauses in contracts to enhance performance tracking, cost optimization, and risk mitigation. Reflecting the push for innovation-led collaborations, 36% of organizations now prefer outcome-based contracts over traditional FTE-based agreements.
Cost savings, once the primary driver for outsourcing, has been surpassed by the need for better alignment with business strategy, cited by 28% of organizations. The shift is fueled by digital transformation, AI, and automation, enabling businesses to outsource complex functions such as product development, supplier evaluation, and strategic brand management.
Yatin Patil, Partner, Deloitte India, said, “Supported by a thriving start-up ecosystem and continuous upskilling initiatives, India is shaping the future of outsourcing by driving cost efficiency and innovation. Nearly 70% of organisations engage with non-traditional service providers to optimise costs while gaining access to new-age technologies and innovative solutions.”
Outsourcing models are also evolving, incorporating a mix of Global Business Services (GBS) centres, third-party providers, and flexible talent solutions. The report highlights that 55% of organisations use GBS centres for governance and oversight, while third-party providers handle execution and efficiency optimization. Additionally, 35% have adopted the Build-Operate-Transfer (BOT) model, allowing them to scale capabilities while maintaining long-term operational control.
Despite global geopolitical uncertainties, India remains a preferred outsourcing destination due to its expanding services sector, stable business environment, and strong policy framework. The country’s expertise in digital transformation, cybersecurity, and vendor management has further cemented its reputation as a secure and scalable outsourcing hub.
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Strategic supplier collaborations have enabled organizations to achieve annual cost savings of 10–25%,
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