For years, global enterprises have leaned heavily on India’s offshore advantage, a vast talent pool, deep technical capabilities, and favorable cost structures.
But the world is shifting. Recent geopolitical tensions have raised the risk profile of global delivery hubs, India included. (read our perspectives here). What was once a clear-cut arbitrage decision is now a more complex strategic calculus.
At the same time, business pressures haven’t gone away. Enterprises are still expected to cut costs, scale up operations, and deliver faster outcomes. This dual force, economic urgency and geopolitical uncertainty, is now becoming a powerful accelerant for an artificial intelligence (AI)-led delivery model.
Reach out to discuss this topic in depth.
When risk outpaces reward
The labor arbitrage model works best in a stable world. But today’s world is anything but:
- Geopolitical tensions are disrupting supply chains and operational planning
- Regulatory scrutiny over cross-border data flows is intensifying
- Volatility in local ecosystems — including elections, conflicts, and currency movements, is harder to predict or hedge
As a result, companies must reassess their offshore strategies. Not because India or other hubs have lost capability, but because the global context has changed. When operational continuity itself is in question, arbitrage needs deeper thinking.
Why AI becomes the default answer
In this landscape, AI is no longer a future-facing innovation project. It becomes a resilience play.
- AI reduces dependence on location-based talent pools, automating repeatable work regardless of geography
- It minimizes human-intensive handoffs, which are often the most vulnerable links in globally distributed delivery models
- It enables multilingual collaboration and support through real-time language translation and voice synthesis, allowing teams to serve global customers without being limited by language skills or time zones
- It flexes consistently, unaffected by hiring bottlenecks, attrition cycles, and seasonal demands
Simply put, AI lets organizations decouple capability from geography, not just for back-office tasks, but increasingly in customer-facing and knowledge-intensive roles as well.
Balancing two types of risk
Now, let’s be clear: AI is not risk-free.
- Concerns around data privacy, model bias, explainability, and regulatory compliance are real
- However, these are engineering and governance challenges, they can be understood, monitored, and mitigated
In contrast, geopolitical risk is external, binary, and hard to predict. Operations can go from “on” to “off” overnight due to factors beyond enterprise control, elections, trade restrictions, or regional conflicts.
So, while AI introduces a new class of risk, it’s a more programmable and manageable kind. It’s the difference between the risk you can design for, and the risk you simply must react to.
A Strategic inflection point
This marks a major shift in global delivery strategy:
- Enterprises will move more aggressively toward AI-led solutions, not just to save costs, but to ensure continuity
- Service providers will be pushed to evolve, from headcount-driven models to AI-augmented, outcome-first platforms
- Delivery location becomes less of a differentiator than delivery model
Beyond cost, the real competitive advantage now lies in building intelligent, distributed, risk-resilient operations.
Final word
The labor arbitrage story isn’t over, but it’s being rewritten. Geopolitical volatility hasn’t just challenged the old model, it has accelerated the transition to the new one.
AI isn’t just a cost and productivity lever anymore. It’s how enterprises build resilience, flexibility, and speed into their global delivery strategies. The winners will be those who understand this shift early, and design their future around it.
If you found this blog interesting, check out Beyond The Flashpoint: Rethinking Location Strategy In The Age Of Overconcentration, A Wake-Up Call For Global Services Leaders | Blog – Everest Group, which delves deeper into another topic regarding location strategies.
If you have any questions or want to discuss how AI is transforming the offshore strategy in more depth, please contact Rajesh Ranjan ([email protected]).
