Generative AI is reshaping the economics of outsourcing by automating routine tasks, reducing the labor cost advantage that drove offshore outsourcing for decades.
# AI Is Rewriting the Economics of Outsourcing
Source: [https://hbr.org/2026/06/ai-is-rewriting-the-economics-of-outsourcing](https://hbr.org/2026/06/ai-is-rewriting-the-economics-of-outsourcing)
[Process management](https://hbr.org/topic/subject/process-management)
by[Abhinav Agrawal](https://hbr.org/search?term=Abhinav%20Agrawal)
June 5, 2026
Jorg Greuel/Getty Images
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## Summary\.
Generative AI is changing the economics that fueled decades of outsourcing growth by automating many routine, rules\-based tasks that companies once sent offshore for labor savings\. Rather than
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For more than three decades, outsourcing has rested on a simple economic idea: If work can be defined, standardized, monitored, and moved to a lower\-cost labor market, someone else can often do it more cheaply\.
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Read more on[**Process management**](https://hbr.org/topic/subject/process-management?ab=articlepage-topic)or related topics[**Supply chain management**](https://hbr.org/topic/subject/supply-chain-management?ab=articlepage-topic),[**Operations strategy**](https://hbr.org/topic/subject/operations-strategy?ab=articlepage-topic),[**Globalization**](https://hbr.org/topic/subject/globalization?ab=articlepage-topic),[**Generative AI**](https://hbr.org/topic/subject/generative-ai?ab=articlepage-topic),[**International business**](https://hbr.org/topic/subject/international-business?ab=articlepage-topic)and[**Corporate strategy**](https://hbr.org/topic/subject/corporate-strategy?ab=articlepage-topic)
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