From staffing to smart solutions: How AI for small businesses is changing outsourcing

Think AI is only for tech behemoths? Think again. The very technology once reserved for corporate giants is now within reach for every small business. The question isn’t whether your business will adopt AI, but rather, what problems will you solve with it first?

Outsourcing, once synonymous with cutting costs through offshore staff, is now morphing into something far more dynamic: a hybrid of people, platforms, and automation.

Andy Schachtel, founder and CEO of Sourcefit, has been steering this transformation firsthand. Since 2009, he’s grown Sourcefit into a global outsourcing provider, and today, he sees AI as inseparable from the industry’s future. 

As Andy puts it in the 553rd episode of the Outsource Accelerator Podcast: 

“We’ll never be just a sole provider of people. It’ll always be some combination of people and technology.”

So what does that mean for small businesses trying to scale in a world where AI is both a threat and an opportunity? Let’s break it down.

AI disruption and new client expectations

The outsourcing landscape is changing fast, and small businesses are at the center of this disruption. Traditional staffing models are being challenged by AI-driven expectations, forcing providers and clients alike to rethink what outsourcing really delivers.

From headcount to technology-first solutions

For decades, outsourcing has been synonymous with staffing. The math was simple: fewer in-house hires meant lower costs. 

But clients—especially small business owners—are no longer just asking, “How many people can we hire offshore?” Instead, they’re asking, “What role can technology play in making my business smarter?”

Andy explains:

“Whereas before they might be looking from their perspective of people and teams, now we feel like there’s been a transition to people looking more towards technology solutions.”

The productivity paradox

Not all AI stories are fairy tales. Some companies rushed in with sky-high expectations, only to discover how messy implementation can be. Andy points to research:

“Gartner [reported] that 40% of agentic AI projects will have been abandoned this year because companies had such huge, high hopes for AI.”

This “productivity paradox” is particularly risky for small businesses. Unlike Fortune 500s, SMEs can’t afford expensive experiments that don’t deliver. What they need are realistic, results-driven applications.

Integrating AI for small businesses

For small businesses, integrating AI doesn’t mean replacing entire departments—it means weaving technology into specific processes where it can add value. The key is balancing automation with human oversight and focusing on high-impact areas.

A. Human in the Loop model

One of the most important lessons for small businesses is that AI works best alongside people, not in place of them. Andy makes this point repeatedly:

“There’s not a single one of our solutions that has eliminated everyone. It’s always going to have a human in the loop to just confirm or check things.”

This approach ensures that while automation accelerates repetitive tasks, humans safeguard quality, judgment, and context. For SMEs, this balance is critical. 

Unlike enterprises, they can’t afford customer-facing errors or compliance missteps. Human oversight keeps AI efficient and trustworthy.

B. Targeted automation for high-value problems

The real wins for small businesses come when AI is applied to specific bottlenecks. Andy highlights a logistics client that had struggled with OCR tools for years. 

Sourcefit’s AI solution achieved “99.9% accuracy” in processing handwritten forms—cutting turnaround times by 90%.

That kind of targeted fix isn’t flashy, but it’s transformative. It saves hours of manual work, reduces error rates, and frees staff to focus on higher-value tasks. 

For SMEs, these efficiency gains translate directly into cost savings and growth capacity.

As Andy explains, AI isn’t about building futuristic super-agents—it’s about practical improvements:

“We’re just gonna put AI in this one little place, and then there’s gonna be a person that’s gonna check it and then output the final product.”

C. Evolving pricing models

AI also forces outsourcing firms to rethink how they price services. Traditional models relied on billing per staff member. But what happens when one automated workflow replaces ten people?

Andy explains the math:

“Let’s say we have 10 people working on a process, and maybe we make $3,000 in gross margin on those 10 people. If we develop a solution that we can charge $3,000 a month for, then of course that’s the same amount of gross margin, but with much less cost in delivering it.”

With a partner like Sourcefit, this also comes with other benefits like HR assistance or offshore office space.

This shift creates new possibilities for SMEs. Instead of scaling costs linearly with headcount, they can pay for outcomes—whether per document, per transaction, or via flat monthly fees. 

It’s a win-win: predictable pricing for clients and more efficient margins for providers.

Sourcefit is already building toward this new reality with WorkingAI, a suite of automation solutions designed to streamline client processes, and Knit, its digital platform that integrates HR, collaboration, and workflow tools. 

For small businesses, these offerings demonstrate how outsourcing firms can provide technology at scale without losing the personal touch.

Why small businesses need outsourcing partners for AI

For many SMEs, the challenge isn’t knowing AI exists—it’s figuring out how to use it effectively. 

Outsourcing firms are stepping into this gap, helping small businesses adopt enterprise-grade technology without the complexity or cost of building it themselves.

1. Access to enterprise-grade solutions

On paper, SMEs have access to the same AI tools as Fortune 500 companies. In practice, integration is where the gap lies. Most small firms don’t have the IT resources to securely and effectively deploy AI solutions.

That’s where outsourcing partners step in. They bridge the gap by embedding enterprise-grade tools directly into workflows. Andy notes that every client conversation now includes AI:

“It’s definitely something where we didn’t have any conversations two years ago. Now every single conversation has something to do with it.”

This shows how rapidly AI has become a must-have—and how outsourcing firms can democratize access for SMEs.

2. Strategic partnership, not just staffing

The most powerful advantage outsourcing firms offer isn’t just technology—it’s trust. They already understand client workflows, pain points, and operational realities. 

That credibility makes it easier to introduce automation as a seamless upgrade rather than a disruptive overhaul.

Andy frames it this way:

“We’ve been there on the ground working with these companies, with their processes [and] workflows. If we come to [a client] and say, ‘We found a way to cut 50% of the time on this process just by adding this automation,’ that’s a fairly easy sell.” 

That gives them credibility that a pure technology vendor doesn’t have.

For SMEs, this kind of partnership is invaluable. It’s not about being sold another SaaS tool—it’s about having a trusted ally engineer solutions that work in the real world.

3. The financial case for AI adoption

Small businesses are always cost-sensitive, and outsourcing’s original appeal was simple: save money on labor. With AI, the financial case becomes even stronger. 

Clients can save tens of thousands of dollars by combining lean teams with automation, while outsourcing providers maintain sustainable margins.

Andy sums up the opportunity:

“Every single one of our clients is interested in a solution like this. And all of our new clients—once we start talking about optimizations and automations—they’re all willing to listen.”

That universal demand underscores a new reality: outsourcing isn’t just about staffing anymore. For small businesses, it’s about future-proofing operations with AI—delivered by partners who understand both the technology and the human side of business.