UTTAR PRADESH, INDIA — The AI disruption is reinventing the BPO industry in fundamental ways. Global companies are reevaluating their outsourcing deals, with Indian IT firms shifting from fixed contracts to flexible models amid the AI transformation.
The recent move by Capgemini to acquire WNS may primarily underscore changes in the company’s operations, but it’s also sending a significant message about AI-driven changes in the BPO space. From fixed-price and volume-based contracts, companies may now start shifting to time-and-material (T&M) agreements, as global clients may demand.
Leading Indian IT-BPO firms, such as TCS, LTIMindtree, Infosys, and Wipro, are among the first companies to embrace this shift. This change pivots away from fixed-priced deals to favor:
- Outcome-based pricing
- Usage-based service models
Why This Shift Matters
The adoption of AI can lead to highly uncertain or rapid changes in project scopes, such as the timeframe required for operations or workforce specifications. Business needs and models can change instantly with automation. Innovation can arise with AI implementation. With all of this ambiguity comes the ineffectiveness of fixed-price contracts.
This change in preference is already reflected in Wipro’s recent earnings report, where fixed-price contracts have declined to 52% of revenue, while time-and-material transactions have increased.
Here’s what this shift also means, in terms of operations:
- Flexibility for providers and clients in terms of services acquired and offered
- Dynamic resource allocation and scaling
- Faster innovations or rollouts for AI projects
This signals the fact that outsourcing contracts and delivery have stopped being “one-size-fits-all.” Instead, they now require significant collaboration, co-design, close analytics, and continuous adjustments between the provider and the client.
