AI tools like ChatGPT are amazing and are already automating work around the world, but how does the growing trend of outsourcing mash with AI automation tools? Is there a date when outsourcing will no longer be needed as robots and AI overtake the labor market?
Strap in because to answer this question, we need to review a couple of global trends in outsourcing and AI adoption.
Outsourcing Talent is Still Expected to Grow, Fast
Outsourcing in North America is growing 9.4% each year, and globally it was valued at USD 261 billion in 2022. Many new outsourcing companies are starting up every day to capture the market, but will the growth rate of outsourcing diminish as companies begin to incorporate more AI tools like WriteSonic and others that are even starting to replace jobs like middle-management.
So if we’re currently in the time of an AI revolution, why is outsourcing projected to increase into the future at a pretty decent rate?
Company AI Adoption is Increasing, but Relatively Slowly
According to a study done by IBM in 2022, AI adoption is growing, slowly.
AI adoption continued at a stable pace in 2022, with more than a third of companies (35%) reporting the use of AI in their business, a four-point increase from 2021. — IBM Global AI Adoption Index 2022
One would guess that the top factor in adopting AI would be to reduce labor costs. It is, but it is not the only factor.
Top 10 Factors Driving AI Adoption
- 43% Advancements in AI that make it more accessible
- 42% Need to reduce costs and automate key processes
- 37% Increasing amount of AI embedded into standard off-the-shelf business applications
- 31% Competitive pressure
- 31% Demands due to the COVID-19 pandemic
- 25% Pressure from consumers
- 23% Directives from leadership
- 22% Company culture
- 22% Labor or skills shortages
- 20% Environmental pressures
As you can see from the two bolded factors above, reducing labor costs and the impact of labor shortages are big factors for AI adoption, but improving the ability of business applications is also a factor. Because reducing labor costs is not the only thing on companies’ minds when they adopt AI tools into their processes, companies are still likely to be increasing their global workforces to supplement AI’s impact on their business. However, in the long run, I would expect AI and automation to have a large impact on the global outsourcing market by 2050 when most, if not all, of the reasons why companies are hesitant to adopt AI will probably have been resolved or at least severely chipped away at.
Fear & Double Checking in Lost Wages
There are many factors at play to think about why outsourcing is projected to grow, even during our current beginning of the AI revolution.
1. Low Trust — Someone Still Needs to Check the Work
Companies and managers are not likely to entirely trust AI fully at the start. Even though a program like ChatGPT could write an amazing post for your LinkedIn company profile page, it might not be in the right tone or style you need. Additionally, it might have factually incorrect things.
According to the IBM study, many organizations are still worried about AI bias and trustworthiness, but they don’t know what to do about it. Until there is a reliable framework for reducing these fears in the minds of companies, they’re going to need someone to review the work that AI produces before it goes “live”.
2. Increasing Global Mindset of Companies
Many companies in the USA already are outsourcing their business processes, but many have yet to overcome the fear of international relationships, taxes, and globalism. Yet as more globally-minded and internet-savvy millennials begin to control management positions, this fear by companies is likely to decrease to give way to more outsourcing.
3. 24/7 Business Opportunities & E-commerce
More companies never want to shut off the lights. Why would they? If you cannot fulfill orders and help customers at all times, you’re losing business. As more companies grow their online presence via e-commerce, the tendency to always be able to do business, facilitated by globally outsourced workforce solutions is likely to continue.
So What’s the Result? Will AI Eliminate Outsourcing?
Probably not within the next decade, but I expect that by 2050 the global outsourcing market will greatly decrease from its all-time high in 2040.