The leveraging of outsourcing engagements to implement and support digital transformation solutions is emerging as the foundation for the next generation of outsourcing. Digital transformation is a critical part of many companies’ strategic roadmap, seen as creating key opportunities for cost savings, efficiency, productivity and quality improvements, enhanced customer experience, and competitive advantages, including through state-of-the-art automation and data analytics. Many companies do not have the internal resources or skill sets to implement digital transformation at the required pace. This is leading to companies “leaning in” on their outsourcing providers to identify, design, and enable digital transformation solutions in a secure and compliant manner.
Market analysts are projecting that the digital transformation market will experience annual revenue growth rates of 28.5% globally and 26.8% in North America (CAGR 2025–2030). This significant growth reflects the increased desire to shift to cloud-based infrastructure, adopt artificial intelligence (AI) use cases and models, enhance customer digital experiences, and expand the connectivity of devices and the processing of data, including the “internet of things” (IOT). Outsourcing customers and vendors are exploring opportunities to merge outsourcing staffing models that provide access to talent and skilled resources with the need for expedited digital transformation implementations.
When entering into or renegotiating business process outsourcing (BPO) contracts, companies need to plan for an engagement that can evolve and adapt with new business models and technologies. Legacy contracts may not have considered the extent to which innovation and digital transformation would impact outsourcing services. Parties to outsourcing contracts should consider if their agreements need to be updated to address additional provisions specific to digital transformation projects. We discussed in an earlier blog post the potential for troubled implementations and contract provisions that may be leveraged to mitigate risks.
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