AI & Outsourcing Series: Digital Dependency and Key Considerations in Outsourcing Deals – Tech & Sourcing @ Morgan Lewis

https://www.morganlewis.com/blogs/sourcingatmorganlewis/2026/06/ai-and-outsourcing-series-digital-dependency-and-key-considerations-in-outsourcing-deals

Publish Date: 2026-06-03 09:05:00

Source Domain: www.morganlewis.com

Introduction to AI-enabled Digital Dependency Risks:
- Companies face growing challenges with digital dependency as outsourcing increasingly involves AI-powered tools and services. These tools can lead to lock-in risks due to proprietary models, datasets, and provider-specific platforms.
Types of Digital Dependency:
- Digital dependency often arises when AI tools are deeply integrated into workflows, providers control AI models and infrastructure, customer data resides in proprietary systems, automation processes are highly customized, and moving to another provider requires significant retraining or rebuilding.
Operational and Commercial Risks Due to Digital Dependency:
- During the term: Reduced flexibility to switch technologies, dependency on vendor updates, lack of visibility into AI processes, exposure to cybersecurity or compliance issues.
- Upon termination: High costs and disruption in transitioning services, data and workflow portability issues.
Importance of Contractual Protections:
- To mitigate risks, organizations are negotiating detailed contractual protections focusing on data ownership, interoperability, AI transparency, source code access, and audit rights. These protections aim to maintain flexibility, portability, and control over data and technology.
Mitigating Digital Dependency Through Governance and Internal Planning:
- Organizations should adopt internal governance strategies to avoid dependency, including maintaining oversight of AI processes, avoiding unnecessary customization, diversifying technology providers, and planning for operational continuity.
Proactive Approach to Manage Risks:
- Companies that proactively manage AI integration and utilize governance frameworks are better positioned to avoid long-term dependency. This includes conducting regular vendor risk assessments and establishing AI compliance programs.
Legal and Consulting Support:
- Outsourcing and AI legal teams offer support in identifying and mitigating digital dependency risks through contract negotiation and development of resilient agreements focused on innovation and long-term control.