Why Do We Need Local LLMs Beyond Privacy?
Local large language models (LLMs) or self-hosted LLMs are typically recognised for their advantages concerning privacy; however, the potential applications for both users and organisations may extend beyond this aspect. These can be a saviour at a time when frequent updates to the cloud-hosted AI models, global outages, and surprise behaviour changes are becoming a challenge for the deployer. Developments like these often come with a layer of unpredictability because the models evolve rapidly, sometimes daily, pushing updates that may improve accuracy in aggregate but introduce subtle regressions or latency issues in specific enterprise use cases. It’s a trade-off not everyone can afford, or should bear with. While a local LLM setup may not match the size of a hyperscaler or may require efforts to manage, it provides stability. This is because when the model lives inside the organisation’s infrastructure or any endpoint, it only changes when instructed or updated. Version-locking AI is Safer and a Cheaper Combo Chaitanya Choudhary, CEO of Workers IO, told AIM, “In my previous work at Grit (used by multiple enterprise customers), we had incidents due to subtle changes that were introduced causing our evals to fail. To overcome these issues, we ran a good amount of workflow on local open source models.” In a Medium blog post, Fabio Matricardi, a control systems engineer, pointed out that flexibility comes at a cost, adding that it’s safer to freeze the version to avoid unexpected breakage. Matricardi explains that updates can disrupt established workflows. For example, a user might have relied on GPT-4 for code refactoring without issues in the past. However, a subsequent update could introduce problems such as generating buggy code, fabricating information, or getting stuck in repetitive loops. For large organisations, this level of control becomes mission-critical. When a helpdesk assistant or internal search agent starts producing unexpected output, the problem often isn’t the prompt; it’s the model behaviour that’s quietly shifted. With local deployment, the team can lock the model version, freeze its dependencies, and audit any change before it goes live. “It feels like you’re going backwards. It’s not just ‘not better’—it’s actually worse,” Matricardi added. Choudhary emphasised that some companies utilise local LLMs to save a part of their cost, “It’s not uncommon for businesses to split workload between open-source self-hosted reasoning models (DeepSeek R1, etc), along with proprietary models (OpenAI O3 and Claude Opus)” Matricardi’s blog post also highlights that local LLMs significantly boost user trust. Instead of reporting the issue, employees may tend to abandon unreliable tools. Whether it’s HR chatbots or financial summarisation agents, consistent performance is crucial for the long-term utility of AI assistants. By adopting local LLMs, teams can prioritise user experience, free from the constraints of vendor roadmap changes. No Waiting on the Cloud to Recover The other advantage is more straightforward: self-hosted LLMs keep running even when cloud services don’t. AI company outages make headlines when they happen, and they are inconvenient to many users and organisations relying on them. Even short periods of downtime can completely stop operations if critical processes depend on the services of these AI companies. Local LLMs bypass this fragility. When a model is deployed on internal servers or edge devices, it becomes immune to upstream downtime. Power issues or networking aside, it’s a closed loop, one that the enterprise owns end-to-end. A recent case of ChatGPT downtime highlighted that many users and organisations rely on such services. The outage reminds everyone to keep local LLMs for backup or move entirely to a local LLM structure if they do not want to be disrupted by such outages. A Decent Private Alternative The need for data privacy and control may have initiated the idea of adopting local LLMs, but reliability sustains it. Choudhary noted that while major LLM providers often have zero data retention policies, addressing data-sharing concerns, organisations in sensitive sectors like healthcare frequently prioritise privacy, making local LLMs a relevant solution. Moreover, the open-source models that can be self-hosted are getting smarter. Choudhary said, “We are seeing a great deal of improvement in the open-source models and the infrastructure providers who are making it easier to host and manage these models in the private cloud.” Enterprises want their data to stay in-house; they also want their tools to behave the same tomorrow as they do today. Cloud models may evolve faster, but local models remain steady. In a world where change is constant, stability is a feature. And sometimes, the most advanced AI is the one that simply works, day after day, without surprises.
“We are seeing a great deal of improvement in the open-source models and the infrastructure providers who are making it easier to host and manage these models in the private cloud.”
“We are seeing a great deal of improvement in the open-source models and the infrastructure providers who are making it easier to host and manage these models in the private cloud.”
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["AI", "ChatGPT", "OpenAI", "DeepSeek R1", "Aim", "RAG", "AI assistants", "chatbots", "TPU", "R"]
I am a tech aficionado and a computer science graduate with a keen interest in AI, Coding, Open Source, and Cloud. Have a tip? Reach out to ankush.das@aimmediahouse.com