A recent report from HFS Research analyzed the effect of tariffs on security operating models. The report reveals that while 83% of U.S. business leaders are fast-tracking AI and automation initiatives in response to trade uncertainty, 69% remain stuck in tactical reactions or have frozen strategic investments, waiting for "more clarity" that may never come.

Key findings include:

• 83% of enterprise leaders are accelerating AI and automation initiatives to counter trade disruption, with 40% acting within the next 12 months.
• Traditional outsourcing models are expected to decline from 55% to 37% over the next two years, while platform-based service delivery will more than double from 14% to 30%.
• 56% now prioritize delivery location flexibility over traditional vendor selection criteria like cost (35%) and expertise (28%)
• 52% are inserting renegotiation clauses tied to economic triggers, while 41% are breaking contracts into smaller, modular scopes
• 96% of procurement leaders are changing their sourcing strategies to address trade risk, cybersecurity, and AI integration.
• 64% of leaders are highly concerned about data sovereignty amid tariff and trade uncertainty, fueling private cloud adoption (53%) and a surge in country-specific data storage requirements (49%).

While 15% of enterprise leaders are proactively accelerating broader business transformation, 83% are ramping up automation initiatives.

The data shows enterprises automate first (triggered at just 5-10% tariff levels), absorb costs second, and then consider structural changes. It's "virtual reshoring" — control comes closer to home while execution remains globally distributed and increasingly digital.

The research documents a fundamental shift from moving work between humans to moving work to machines. Traditional outsourcing models are collapsing — expected to drop from 55% to 37% within two years — while software-led service delivery more than doubles from 14% to 30%.

This transformation is reshaping vendor selection criteria entirely. Geographic flexibility now trumps cost (56% vs. 35%), with 70% of enterprises reevaluating their vendor mix and over 90% increasing AI-specific spending.

Perhaps nowhere is the shift more apparent than in procurement, with 96% of procurement leaders changing sourcing strategies in response to trade volatility, AI adoption, and cybersecurity threats. Legacy sourcing models built for cost control are becoming strategic nerve centers managing real-time AI risks, data residency laws and geopolitical escalation.

Data sovereignty anxiety is driving concrete infrastructure changes, with 64% extremely concerned about data control, leading to increased private cloud adoption (53%) and requirements for country-specific data storage (49%).