Is this the end of the labor arbitrage era?

HFS studied 25+ major providers to find out who actually converts AI into results. Here's where Firstsource stands, and what it means for your industry.

• Firstsource is among the only major providers that convert AI investment into real revenue
• Market-wide, revenue per employee grew just ~1.7% despite near-universal AI spend
• See what it means for your industry below

Ask us what non-linearity could mean for your operations

What’s changing?

For a decade, provider headcount was the default measure of scale: more people, more revenue. HFS Research's Non-Linearity Index tests whether that link still holds by examining revenue and margin per employee across more than 25 major service providers. It finds a small group growing value faster than headcount, and Firstsource is one of six sustaining that pattern for four straight quarters. If you want an outcome-based partner, this is what one looks like.

HFS Non-Linearity Index by Industry | Firstsource

What does this shift mean for your business?

Banking & Financial Services

Mortgage servicers are already cutting cycle times by50-67% and error rates to below 5%; fraud screening cuts onboarding time by 83%.Outcome-based pricing is already live here.

Health Plans & Healthcare Providers

Health plans are hitting 95%+ intake accuracy and 80%+straight-through processing, while claims teams file 47% faster. The non-linearshift is already live.

Communications

Telecom operators are cutting high-value customer churn 25% with agentic AI prioritization, proof that outcome-linked delivery scales in retention-critical work.

Media

Content and audience operations are prime ground foroutcome-based delivery, where speed and personalization at scale replaceheadcount-driven staffing models.

Technology

Tech providers face the same buyer shift from FTE pricingto consumption and outcome-based models. The gap here is proof of results, notambition or intent.

Edtech

Student support operations are already seeing an 80% cutin turnaround time with agentic self-service, a clear signal of whereoutcome-based delivery is heading.

Retail & Digital Marketplaces

Marketplace operators face the same pressure to provevalue beyond headcount. Non-linear economics are becoming a real differentiatorin vendor selection.

Energy & Utilities

Utilities are already recovering over £600K in leakedrevenue through process intelligence, a concrete example of margin growingfaster than headcount.

Why the Market Is Shifting?

AI adoption is outpacing results

Revenue per employee grew only ~1.7% and margin per employee grew ~6.5% market-wide, with gains concentrated in a handful of providers, despite near-universal AI investment.

Buyers are paying differently

65% of enterprises still buy on FTE pricing today, but that share is expected to shrink sharply over two years as outcome and consumption pricing grows.

A capability divide

Most providers are investing heavily in AI without converting it into consistent revenue or margin gains. HFS calls this a capability gap, not a budget one.

Non-linearity is a buying criterion

Enterprises are expected to increasingly evaluate providers on proof of non-linear performance, separating partners worth scaling from unproven AI stories.

The old model, where you hand off disparate parts and manage a vendor, doesn't hold up when the technology is moving this fast. Firstsource is a true partner that has actually made the leap. They're not advising us on AI. We're reimagining processes and co-creating new capabilities inside our business, and owning what comes out the other side. That's a different conversation entirely.

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Bala Viswanathan

Founder & Group CEO, Aptia Group