AI revolution backfires: Why enterprises are regretting their automation investments

In a shocking revelation, customer satisfaction with technology providers has taken a nosedive over the past year, according to the latest findings from Information Services Group (ISG). This decline comes despite the soaring adoption of AI and automation services in outsourcing contracts, painting a bleak picture for enterprises who have heavily invested in these technologies.

AI and Automation: The Bitter Pill Enterprises Didn’t Expect

Outsourcing deals involving AI and automation have skyrocketed in 2024, with companies eager to harness these cutting-edge technologies to boost efficiency and slash operational costs. Yet, in a stunning twist, enterprises are reporting lower satisfaction levels with these services compared to traditional technology offerings. The most alarming detail? Generative AI (GenAI), the very technology that has been the darling of investors and tech enthusiasts alike, has emerged as the most disappointing player, recording the lowest customer experience (CX) score among all emerging technologies.

The overall satisfaction with service providers, as reflected in the average enterprise CX score across various sectors, has plummeted by over 3 percent from the previous year, landing at a dismal 71.5 out of 100. This significant drop should serve as a wake-up call for enterprises and providers alike, highlighting that the much-touted benefits of AI and automation might not be living up to the hype. The urgency for providers to focus on customer experience has never been more critical, especially after the catastrophic global technology outages that have rocked the industry this year.

A Stark Contrast in Technology Domains

The ISG report’s analysis of customer satisfaction across different technology service categories paints a sobering picture. It reveals that customer satisfaction is being influenced by a complex interplay of factors, including the complexity of the technology, the tangible benefits it delivers, the availability of skilled talent, and the ability of vendors to proactively introduce these technologies. However, it’s clear that many providers are falling short.

In the Business Process Outsourcing (BPO) category, which received the highest average satisfaction score of 72.9, there’s a clear divide. Marketing Technology services are thriving, driven by a surge in demand from companies desperate to stand out in an increasingly competitive market. However, the story isn’t as rosy for supply chain services, where satisfaction levels have plummeted, reflecting the brutal reality of ongoing disruptions and macroeconomic challenges that are wreaking havoc on enterprise supply chains. The message here is clear: while some BPO services are hitting the mark, others are floundering under the pressure.

For IT Outsourcing (ITO) services, the average CX score of 71.6 underscores the need for providers to up their game. Within this category, Application Development and Maintenance (ADM) shines brightly, with enterprises relying on it to power cost-effective digital transformations. However, the narrative takes a dark turn when it comes to mainframe services, which are struggling with talent shortages and a dwindling number of providers capable of supporting these aging systems. The future of mainframe services looks bleak, and providers must urgently address these challenges if they hope to turn the tide.

The Ecosystem category, which encompasses services related to major vendors’ technologies, also reveals a stark contrast. Microsoft ecosystem providers have earned top marks, thanks in part to the widespread deployment of its Copilot AI agent across various industries. But the VMware ecosystem has not fared as well, with customer dissatisfaction surging due to the company’s controversial acquisition and subsequent price hikes. The takeaway? Even established tech giants are not immune to customer backlash when their actions are perceived as self-serving.

Emerging Technologies: High Hopes, Low Satisfaction

The most disappointing revelation of the ISG report is the dismal performance of Emerging Technology services, which received the lowest overall satisfaction scores, with an average CX score of 70.1. Despite the rapid adoption of AI and automation solutions by some enterprises, satisfaction remains abysmally low, particularly for Generative AI, which scored a shocking 68.46, the lowest in this segment. This score is a glaring indicator that the promise of GenAI is far from being realized, leaving enterprises questioning whether their investments in this technology have been worth it.

In stark contrast, cloud-native tools such as containers and serverless architectures have been met with more enthusiasm, achieving the highest score in the Emerging Technology category at 73.7. This suggests that while some new technologies are failing to meet expectations, others are quietly delivering value, proving that not all innovation is created equal.

The report also dives deep into satisfaction levels with ITO and BPO services across different regions and industries, revealing a complex landscape where customer experience is becoming the ultimate battleground for service providers. ISG’s ongoing Voice of the Customer survey, which continuously gathers real-time feedback from enterprise customers, underscores the importance of staying attuned to customer sentiments. As the IT and business services landscape continues to evolve, those who fail to prioritize customer experience risk being left behind.