On January 8, 2025, Doneld Shelkey, Mike Pierides, and Marina Aronchik hosted a webinar focused on Outsourcing and Technology 2025, part of the Morgan Lewis Tech & Sourcing Webinar Series: Data 2025.
This session highlighted the newest trends in outsourcing, technology, and AI. It also discussed the challenges that come with handling data.
Here are some key points from the webinar:
Key Trends for 2025
- Digital Transformation:
- Most businesses now view digital transformation as a critical strategy. About 90% of organizations are in this process (McKinsey).
- While many aim for outcome-based contracts, most engagements still rely on traditional time and materials pricing.
- Artificial Intelligence (AI):
- Nearly 60% of companies have begun using AI for at least one part of their operations (McKinsey).
- Industries like healthcare and automotive are likely to see the biggest changes due to AI (PwC).
- Cloud Services:
- Spending on cloud infrastructure is increasing fast.
- AI is becoming a significant factor for cloud services, with major providers seeing positive returns on their AI investments (Canalys Q3 2024 Survey).
- Challenges in moving to public cloud include understanding app dependencies and evaluating costs (Flexera).
- Cybersecurity and Resilience:
- Most organizations (90%) have faced major disruptions, excluding those from Covid-19, such as cyberattacks and supply chain issues (PwC).
- Cybersecurity continues to be a priority for regulators worldwide.
- Global Capability Centers (GCCs):
- GCCs are on the rise, creating over 600,000 new jobs in India from 2018 to 2024, reaching a total of 1.6 million jobs (The Economic Times).
- These centers attract businesses looking to explore opportunities in India without heavy commitments.
- However, the vendor community for GCCs is still developing, and their effectiveness is not yet fully established.
- Data Centers:
- Demand for data centers is increasing. By 2030, their energy requirements may triple, rising from 3-4% to 11-12% of total U.S. energy demand (McKinsey).
- Data Use and Management:
- Companies are increasingly focused on data access and security.
Contracting for AI and AI Use Policies
Two main areas of focus in AI contracting are notification and testing.
- Notification: Vendors might need to inform customers about their use of AI within services. It’s essential to clearly define “AI” to ensure effective communication.
- Testing: Customers will likely want vendors to show how they test AI solutions for legal compliance, bias, and defects. This may require aligning with the vendor’s existing policies.
More companies are developing AI use policies, covering topics like:
- Using custom vs. public AI tools
- Training for personnel
- Related company policies
- Avoiding bias
- Confidentiality
- Intellectual property rights
- Valid input data
- Accuracy of results
- Human oversight
- Approval levels for use
Cloud Services Agreements in 2025
Market dynamics are shifting cloud contract terms and pricing.
Renewals often require renegotiation or restructuring.
When planning renewals, consider these key factors:
- Changes to contract structure
- Existing contract issues
- New terms for core services
- New service terms
- Changes due to new regulations
Tech & Sourcing Webinar Series: Data in 2025
Join the upcoming sessions of our Tech & Sourcing Webinar Series: Data in 2025, running through May 2025.
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