Companies are growing less interested in moving IT offshore, and are instead looking to automate more tasks, according to a ComputerWorld report.
Cheap overseas labor is becoming less appealing than technology that automates enterprise functions such as infrastructure management or business process outsourcing.
"The search for just cheaper people is a thing of the past," said Frances Karamouzis, an analyst at Gartner.
Karamouzis pointed to "Robotic Process Automation," RPA, which automates structured tasks, as an example of an automation tool that’s beginning to gain momentum in the enterprise.
Leading overseas firms like Infosys, Tata Consultancy Services and Wipro, have seen the shift coming and have begun to focus on AI-based automation tools.
Outsourcing contracts have already begun to shrink. Last month, IDC data found on average, the size of IT outsourcing deals have become smaller. The average deal size of the top 100 global outsourcing contracts was $680 million in 2005, according to David Tapper, vice president of outsourcing and offshoring services at IDC. In 2015, the average deal size fell to $392 million.
In October, a survey by Information Services Group found one-third of companies say they plan to cut 25% of IT workers by 2020. Increased automation of back-office IT services jobs will be the primary driver of such reductions, according to the survey.
Last September, HP said it would lay off up to 30,000 employees as it looks to automate many tasks in order to remain competitive.