Tech & Sourcing @ Morgan Lewis

The fourth blog in our AI and Outsourcing series examines another significant consequence of AI-enabled outsourcing: the fundamental shift in how parties define, measure, and price value. As artificial intelligence (AI) becomes embedded in service delivery, traditional pricing models based on labor inputs, headcount, and transaction volumes are increasingly being challenged. Customers and service providers alike are reevaluating how outsourcing arrangements should be structured when automation and AI-driven efficiencies can dramatically alter the economics of service delivery.

As artificial intelligence (AI) becomes increasingly embedded in outsourced services, companies are facing a new and growing challenge: digital dependency on their vendors. Modern outsourcing relationships are no longer limited to staffing support or standardized technology platforms.

In the first post in our AI & Outsourcing series, we observed how artificial intelligence (AI) is transforming the outsourcing industry in ways that extend far beyond operational efficiency. This second post in the series discusses the need to rethink legal and commercial terms that govern outsourcing relationships, as companies increasingly incorporate AI-enabled tools and automation into outsourced services.

Welcome to the first blog in our AI and Outsourcing series, where we explore the disruptive and transformative impact of artificial intelligence (AI) on outsourcing and managed services transactions.

Two years ago, many technology agreements addressed artificial intelligence (AI), if at all, through a generic disclaimer or a brief acknowledgment that AI features might be included in the offering. Today, that approach is inadequate. The integration of AI into commercial products, outsourcing arrangements, and enterprise software agreements has forced a rethinking of longstanding contract frameworks.

With the pace of new product releases and market buzz, artificial intelligence (AI) has crossed a line in many organizations from an experimental tool to an embedded business function. Companies are increasingly relying on third-party AI offerings to support core processes, streamline operations, automate customer support, and perform other back-office and customer-facing tasks.

In Part 1 of this Contract Corner, we discussed the renewed focus on resilience in outsourcing agreements for 2026 and how resilience is increasingly becoming a design requirement, not just an untested BCP. In Part 2 we look at how geopolitical pressures can quickly become delivery constraints and how many organizations are leveraging global capability centers as an anchor for critical knowledge and continuity, and provide a practical 90-day action plan and high-level contract checklist that deal teams can leverage during strategy planning.

Outsourcing strategies in 2026 are being shaped by persistent disruption. Geopolitical uncertainty, major service outages, talent disruption, and post COVID-19 consolidation initiatives are driving a renewed focus on resilience in outsourcing operations and contracts.

Legal departments and contract teams are now often under pressure to move faster, provide value, and streamline processes all while contracts increase in length and complexity to address changes in technology (e.g., artificial intelligence) and laws (e.g., various privacy and regulatory requirements). The good news is that meaningful contract streamlining does not require a full rewrite or oversimplification of existing templates. Small, targeted changes can improve speed to contract, clarity of the agreement, and usability for both the legal/contract team and business team stakeholders.

In an era defined by economic volatility, supply chain disruptions, rapid technological change, and geopolitical risk, outsourcing remains an attractive strategy for businesses seeking efficiency and scalability. At the same time, uncertainty has fundamentally changed what clients expect from their outsourcing agreements. Rigid, long-term contracts that assume stable market conditions are increasingly misaligned with business reality.