The business process outsourcing (BPO) industry is undergoing a significant transformation due to the rapid adoption of artificial intelligence (AI). According to K Krithivasan, CEO of Tata Consultancy Services (TCS), AI is automating routine tasks and reshaping service delivery models, forcing the BPO industry to reinvent itself. Krithivasan had predicted this shift two years ago, stating that AI would disrupt the BPO industry faster than traditional IT services. The acquisition of WNS by Capgemini for $3.3 billion is a testament to this trend, as companies seek to merge BPO services with AI capabilities to offer more advanced automated services.
The rise of AI in the BPO industry is expected to displace low-end jobs, but it will also create new high-paying positions in data science, AI development, and online marketing. However, established players like TCS believe that their industry experience and ability to understand context will enable them to compete with startups that are leveraging AI. The use of AI is already improving accuracy, reducing expenses, and enhancing the quality of services in the industry.
The BPO industry is also witnessing a trend of consolidation, with traditional IT companies expanding their BPO services to include AI and automation. This shift is driven by the need to replace the old labor arbitrage model with tech-enhanced, outcome-based services. While young AI-born companies are emerging with flexible delivery models, established players like TCS still hold a significant advantage due to their extensive industry knowledge.
To remain competitive, firms need to balance the impact of automation with human support. The industry is undergoing significant changes, and companies like TCS, Capgemini, and WNS are adapting to these changes. In fact, these companies recently ranked #8, #5, and #22, respectively, in the OA500 2025, an objective index of the world’s top 500 outsourcing companies. As the BPO industry continues to evolve, it is likely that AI will play an increasingly important role in shaping its future.