A survey of 112 U.S.-based IT leaders from global enterprise organizations that to varying degrees work with global systems integrators (GSI) finds that 94% have seen service-level agreement (SLA) breaches caused by poor outsourced ITOps performance.

Conducted by the market research firm UserEvidence on behalf of BigPanda, the survey spends an average of $5.36 million annually on IT operations support outsourced to global systems integrators (GSIs), with respondents reported handling approximately 25,000 Level 1 incidents per month, with organizations on average having 115 L1 engineers working full time.

More than three-quarters (79%) said their organization outsources ITOps support to two or more GSIs. Ninety percent also reported unplanned expansion, overage, or true-up charges, which added an average of 30% to annual contract costs.

More troubling, on average it takes 34 minutes to route each issue, with 34% of level 1 issues being misrouted while 24% are resolved incorrectly or require rework. L2/L3 engineers also spend 41 hours/month on average fixing lower-tier work, with 50% describing the costs incurred as “significant” or “severe”

Nearly three-quarters of respondents (74%) said they also expect incident volume to rise in the next 12 months, with the average increase expected being 27%, the survey finds. As a result, 92% of respondents said they are open to, evaluating, or piloting alternatives to their current L1 model, with 41% planning to actively assess alternatives in the next 12 months. Top motivations for change are faster triage/resolution (53%), improved accuracy (50%), agentic technology (40%) and cost reduction (36%). In terms of AI agents, survey respondents expect faster triage/routing (22%), reducing misrouted incidents/rework (17%), consistent 24×7 coverage (16%) and eliminating direct labor cost (13%) to provide the most benefits.

BigPanda CEO Assaf Resnick said given the level of investment in outsourced services, it’s clear that the present approach to providing IT services is no longer viable. With each service interruption, the amount of revenue that organizations are potentially losing is staggering, he added. As artificial intelligence (AI) continues to advance, the time has come to replace IT service providers with AI agents that can address incidents at much higher levels of scale in ways that outperform a GSI, he added.

In addition to reducing the total cost of IT, those AI agents will operationalize tribal human knowledge in a way that becomes a corporate asset, those AI agents, noted Resnick.

It’s not clear how long such a transition might require, but in the meantime IT teams continue to have to invest in IT tools despite relying on GSIs. On average, survey respondents report using 19 monitoring and observability tools, with 23% using 25 or more. The most widely used IT service management platforms are from ServiceNow (85%), Zendesk (54%), Atlassian (47%) and BMC (35%).

There is little doubt at this point that AI is transforming how IT is managed. The only thing that remains to be seen is at what pace and the degree to which it might change the balance between internal IT teams and external service providers. Regardless of the outcome, however, the one thing that is certain is that IT as it has been historically delivered and managed, has already been forever changed.