The Services Industry Is Moving From Relocation To Reinvention

For three decades, the services industry has thrived on a powerful idea: move work from high-cost to low-cost locations. It’s been the backbone of our global services model – generating value through labor arbitrage. That era, while not over, is no longer where the most transformative value will be created.

We are now entering a new chapter; one centered not on where work is done but on how it is done.

Relocation: A Proven but Maturing Strategy

Let’s start with where we’ve been. The relocation model has been enormously successful. Whether executed via third-party service providers or Global In-house Centers (GICs), companies achieved 20–25% cost savings by moving work offshore to locations such as India, the Philippines, and Latin America.

This model brought its own operational challenges – requiring new communication approaches, process rigor, and hybrid onshore-offshore delivery models – but over the past 30 years, the industry has absorbed these changes. Today, relocation is a mature, well-understood lever embedded in the operating fabric of nearly every global enterprise.

Yet, while relocation reduced costs, it rarely altered how work was fundamentally performed. The processes remained largely intact – only the location of execution changed.

Reinvention: A Shift in the Center of Gravity

With the advent of AI and increasingly capable automation tools, we stand at the edge of a far more transformative shift. The center of gravity in services is moving from relocation to reinvention.

To be clear, relocation isn’t going away. Companies will continue to leverage global talent pools. But the differentiating value – the real innovation – will come from rethinking and redesigning how work is done. AI gives us the ability to fundamentally reshape both our business functions and processes.

AI Enables Three Layers of Change

AI can be categorized by its type or by the intent behind its use. When it comes to business models and services, we find it most useful to focus on intent – what you’re trying to achieve with AI. At Everest Group, we see AI impacting enterprise services in three distinct ways:

1. Enhancing Systems of Record: Here, AI enriches existing platforms, making them more responsive, intelligent, and effective. This is the natural extension of the digital transformation playbook.
2. Augmenting People in Systems of Engagement: In this model, AI serves as a tool to make humans faster and more productive. We call this “AI in the loop.” It’s already reshaping knowledge work across marketing, finance, legal, and operations.
3. Introducing Systems of Execution: This third category of AI is where we’re intentionally using it to reinvent how we do business processes, and what’s emerging from this is a new category of system, which we at Everest Group call the Systems of Execution. This is where the transformation becomes profound. AI agents begin to replace, not just assist, human labor. These agents orchestrate and execute business processes across existing systems, triggering a fundamental rethinking of workflows, roles, and value creation.

It’s this third category, Systems of Execution, that signals the pivot from augmentation to automation. From evolution to reinvention.

Reinvention Will Redefine Services

Firms will be doing all three categories. Most firms have their employees and associates already using ChatGPT and other tools. As more tools become available, it’s inevitable that employees will adopt them. And so, most firms are seeking to both govern that use and encourage it, because we want people to be more productive and more effective.

Firms are also seeking to add AI into their own tech stack, if only by looking at what vendors are offering. In addition to that, companies are looking to add AI themselves, in a bespoke way, whether to enhance vendor systems or their own homegrown solutions.

Over the next 10 years, we believe companies will be forced into reinventing how they work. Legacy processes, previously moved offshore, will now be re-engineered to run through AI-led execution layers. In many cases, the location of work will become less relevant, as machines are cheaper and more consistent than even the most cost-efficient labor markets.

And as work becomes more digitized, proximity and integration with the business will grow in importance. Reinvention will require not just new tools, but new relationships within the business.

Why This Shift Will Be More Challenging Than Relocation

Relocation, for all its operational complexity, didn’t challenge the core operating assumptions of the enterprise. Reinvention does. It requires a top-down commitment to rethink how work gets done, often by the very people whose roles may be transformed or replaced. That’s a difficult conversation. People can’t imagine a world in which they don’t have a role in it. It requires significant senior executive commitment and push-through to do that. It’s far easier to augment current teams or embed AI into existing tech than to reimagine entire workflows. But if we are to realize the full value of AI, this is the work ahead.

We must also recognize that this is not a “Big Bang” transformation. Reinvention will happen process by process, use case by use case, sliced into thin, manageable initiatives. This modular approach is essential for scale and sustainability.

Yet, it remains a complex and deeply strategic endeavor. Unlike past transformations, reinvention cuts across the technical, operational, organizational, and human layers of the enterprise. It challenges not just what we do, but how we think about doing it.

The Next Generations of Enterprise Services

We believe this pivot to reinvention will take 10 to 20 years to fully mature, mirroring the timeline we saw with global delivery and relocation. But the direction is clear. Reinvention will define the next generations of enterprise services. Organizations will need to think about this shift that is about to happen – from a focus on relocation to a focus on reinvention. It took us 30 years to get to maturity with relocation, and it certainly seems less risky. Organizations could do the same thing but do it cheaper in a remote location. Reinvention inherently is more painful because it requires us to rethink how we do business.

However, AI tools are getting better every day. It’s almost mind-boggling how fast they’re improving. So, it doesn’t mean we can’t make significant progress today as we lay down these new Systems of Execution. And this journey doesn’t mean replacing existing systems wholesale. SAP, Oracle, and Salesforce aren’t going away. Instead, AI-driven Systems of Execution will increasingly sit atop these foundational platforms, managing, coordinating, and optimizing the work itself.

In many cases, we believe we’ll ultimately achieve 80% or more people replacement – which is remarkable. While that level won’t be reached overnight, the journey toward it has already begun.