The landscape of IT services is undergoing a profound evolution as AI and generative AI (GenAI) technologies reshape operational efficiencies and cost structures. In their quest for digital transformation and achieving business goals, organizations are increasingly embracing automated solutions to optimize processes and cut down expenses. However, many still pursue outcome- and value-driven agreements that necessitate a “human touch,” particularly for intricate cloud migration strategies, which may involve added costs for human expertise. Gartner anticipates that by 2028, human intervention in IT services will demand at least a 20% premium as more IT services become automated and enhanced by AI.
The Significance of Automation
Advances in AI and GenAI are transforming IT services by providing alternative methodologies to the traditional reliance on human labor. Technologies such as self-service, self-repair, and code debugging are diminishing the need for human involvement, leading to a notable reduction in the average transaction costs. Automation in ticket and request resolution is becoming more common, further slashing operational expenses for service providers. Nonetheless, this shift underscores the continued necessity for human participation in domains where automation falls short.
The Talent Shortage and Cost Implications
The persistent scarcity of skilled digital professionals is exacerbating the cost dynamics within the IT services sector. As the availability of advanced skills remains constrained, the value and cost of human input are escalating. Organizations need to judiciously evaluate whether the advantages of expert human input justify the accompanying costs. Human skills are indispensable for intricate problem-solving, interactions that require emotional intelligence, and decision-making that involves ethical considerations. Furthermore, including a human element can reduce risk exposure and add a layer of accountability.
Striking a Balance Between Automation and Human Insight
Organizations must strategically navigate the intersection of automation efficiencies and the invaluable insights that human experts provide. While automation can yield substantial cost savings by simplifying routine tasks, the premium placed on human intervention emphasizes its ongoing significance in areas that necessitate personalized, human-focused support. This transformation calls for a nuanced approach to IT outsourcing strategies, ensuring that service providers deliver meaningful value and results through human-led initiatives. As a result, the labor and IT services markets are expected to witness a division in pricing, with lower-skill tasks and roles experiencing cost reductions, whereas higher-skill positions increasingly garner premium rates. This trend prompts organizations to assess their requirements and capabilities adequately to optimize their IT strategies effectively. Through careful evaluation, they can harness the strengths of both automation and human involvement. To proficiently manage the incorporation of AI and automation into IT services, organizations should consider executing pilot projects that utilize these technologies. This method facilitates a comprehensive evaluation of their effectiveness and identifies specific areas where human input remains essential. In cases where human expertise is critical, it is prudent to negotiate contracts based on business outcomes that clearly delineate expected deliverables and justify the premium costs associated with human involvement. Additionally, organizations should focus on cultivating internal digital talent through targeted training and development programs, thereby reducing reliance on outsourced human-intervention services and enhancing in-house capabilities. The author is Matt Baldino, Principal Analyst at Gartner.
Disclaimer: The opinions expressed are solely those of the author, and ETCIO does not necessarily endorse them. ETCIO will not be liable for any damages caused to any person or organization directly or indirectly.
