What the shift from IT outsourcing to AI services means for smaller firms

The classic IT outsourcing pitch, cheaper headcount doing well-defined work, is getting squeezed from both directions. Clients can now get a chunk of that work done faster with AI, and the remaining work increasingly needs judgment that's hard to outsource on price alone.

This isn't the end of services, it's a re-pricing

The firms most exposed are the ones whose entire value proposition was "we do this cheaper." That's a real risk. But the firms whose value was "we understand your business well enough to make good calls on your behalf" are actually better positioned, because AI makes it cheaper for them to cover more ground per person.

What smaller firms can do that platforms can't

A large platform vendor has to build for the average customer. A smaller firm can build for one customer's actual mess. That's the advantage worth leaning into, using AI to do more with a small team, not competing purely on headcount rate.

Where this leaves us

We built Pagsun around this bet: combine AI leverage with the kind of client-specific judgment that's genuinely hard to commoditize.