AI & Outsourcing Series: AI Changes the Terms—Rethinking Outsourcing Deals – Tech & Sourcing @ Morgan Lewis

Traditional outsourcing contracts are no longer sufficient to address the new variables introduced by AI, including autonomous decision-making and evolving algorithms.
Key areas under scrutiny in new outsourcing agreements include intellectual property rights, data usage and ownership, and liability, compliance, and governance frameworks.
There is a growing focus on ensuring proper use and protection of customer data in AI-enabled outsourced services, especially in highly regulated industries.
Businesses are negotiating more detailed provisions around oversight, AI testing, compliance with global AI laws, and insurance coverage for AI-related risks.
Pricing models and workforce assumptions are evolving due to the impacts of automation and efficiency gains provided by AI, leading to discussions on outcome-based pricing, shared savings, and reskilling obligations.
Transformation projects integrating AI technologies into customer operations have become a central focus of outsourcing deals, requiring careful planning and clear definition of roles and responsibilities.

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