AI Redefines BPO Success as Innovation, Outcomes: ISG Study

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New ISG research says enterprises expect AI to create another route to meet BPO objectives, challenging BPO providers to prove they have superior expertise and governance Enterprise expectations for business process outsourcing (BPO) are changing as companies deploy AI at scale and invest in alternatives to BPO, forcing providers to deliver and demonstrate more value, according to a new research report from Information Services Group ( ISG ) (Nasdaq: III ), a global AI-focused technology research and advisory firm. The ISG State of BPO Report, published today, draws on a survey of 250 senior decision-makers and ISG analysis of commercial sector contract bookings that show an uneven recovery for BPO since the pandemic. BPO bookings remain below 2019 levels, while bookings for IT outsourcing (ITO) have risen. The survey found that enterprises now expect providers to deliver more work and greater innovation without increasing staff. Facing intense competition and expecting cascading benefits from AI and automation, BPO providers have begun committing to greater staffing reductions. Seventy percent of respondents expect their providers to deliver more innovation, but only 40 percent expect outsourced staff to increase, and 29 percent expect internal staff to increase. Cost reduction and efficiency are the top two reasons for outsourcing, as enterprises increasingly look for savings to pay for AI transformation. However, as companies seek to reshape their operations with AI, ISG says the next phase of BPO growth will depend on providers not simply running operations but improving them. "AI is transforming ... Full story available on Benzinga.com