AI Is Reshaping India’s Offshore Jobs, but Customer-Service Employment Continues to Grow

Artificial intelligence is rapidly changing the economics of global outsourcing, yet the latest employment data presents a more complicated picture than a simple story of machines replacing offshore workers.

Customer-service and business-process jobs in countries such as India and the Philippines remain significant, even as companies increasingly introduce AI tools to automate routine tasks and improve worker productivity. Recent analysis shows that offshore employment has continued to expand in some areas despite growing expectations that artificial intelligence will eliminate large numbers of support jobs.

AI Has Not Eliminated Offshore Work

The latest evidence challenges the idea that AI adoption automatically leads to an immediate collapse in offshore employment.

Data cited by economist Torsten Slok shows that call-centre employment in the Philippines almost doubled between 2016 and 2025, reaching around 2 million workers. At the same time, unemployment rates in both the Philippines and India declined between 2021 and July 2026.

The figures suggest that businesses are not necessarily choosing between human workers and AI. In many cases, they are combining the two.

The Productivity Effect

One explanation is that AI can make customer-service employees more productive.

Instead of replacing an entire support team, companies can give employees AI assistants that help them find information, prepare responses and handle routine customer requests more quickly.

A widely cited study involving more than 5,000 customer-support workers found that an AI conversational assistant increased productivity by an average of 14% per hour.

Higher productivity can reduce the amount of human labour required for individual tasks, but it can also make customer service cheaper and encourage companies to serve more customers.

Economists describe this phenomenon through the concept of Jevons paradox: when technology makes a resource more efficient and cheaper to use, demand for that resource can sometimes increase rather than decrease.

Routine Tasks Face the Greatest Pressure

The impact of AI is nevertheless becoming increasingly visible in the structure of offshore employment.

Simple activities such as answering frequently asked questions, checking order status, processing basic requests and entering information can increasingly be handled by AI-powered systems.

Companies are therefore under pressure to redesign jobs so that human workers concentrate on cases requiring judgement, empathy, negotiation or specialised knowledge.

This could gradually reduce demand for certain entry-level positions even if total employment in the wider sector continues to grow.

India’s AI Workforce Is Expanding

At the same time, India is developing a growing workforce dedicated to implementing AI rather than simply performing traditional outsourced tasks.

A 2026 workforce analysis estimated that India had approximately 920,000 AI professionals, including both specialists working directly on AI and employees using AI within other business functions.

The changing demand is particularly important for India’s Global Capability Centres, which are increasingly moving beyond traditional back-office operations into engineering, data, product development and AI.

GCCs Are Becoming More Important

Global Capability Centres are emerging as a major source of technology employment in India.

Recent reporting indicates that GCC hiring is increasingly focused on specialised roles rather than conventional back-office work. Companies are looking for professionals who can combine technical knowledge with understanding of specific industries and business processes.

This represents an important change in India’s traditional outsourcing model.

Instead of simply providing lower-cost labour, Indian technology centres are increasingly expected to develop products, manage sophisticated systems and create AI-enabled solutions for their global parent companies.

Entry-Level Workers Face a Tougher Market

The transition is creating a particular challenge for young graduates.

AI tools can perform many basic programming, customer-support, documentation and analytical tasks that were previously assigned to junior employees. As a result, companies can become more selective when recruiting entry-level workers.

Recent reports indicate that Indian employers are increasingly prioritising experienced professionals and people who combine technical abilities with domain knowledge.

The implication is significant: graduates may need to develop practical AI skills and industry knowledge earlier in their careers.

Customer Service Could Become More AI-Assisted

India’s customer-service sector is also moving toward a hybrid model.

AI agents can classify customer requests, identify sentiment and generate responses, while human employees remain responsible for complex cases and decisions requiring judgement.

For example, IndiaFirst Life has begun deploying AI agents for underwriting, customer service and claims-related workflows while retaining human involvement for cases requiring professional judgement.

Such systems illustrate how automation may change the nature of customer-service employment without immediately eliminating the human workforce.

Companies Are Looking for Different Skills

The technology shift is changing what employers expect from workers.

Pure coding ability is becoming less valuable when AI can generate routine software. Companies increasingly want employees who understand how technology can solve real business problems.

Industry executives have highlighted growing demand for people who combine AI literacy with knowledge of areas such as retail, supply chains, finance and other specialised industries.

This could favour workers who develop both technical and non-technical expertise.

The Future of India’s Outsourcing Industry

India’s outsourcing industry is therefore entering a period of structural transformation.

The old model relied heavily on large teams performing repetitive tasks at lower costs than workers in developed economies. The emerging model places greater emphasis on automation, specialised knowledge, AI implementation and higher-value services.

That transition could reduce employment in some traditional functions while creating new opportunities in AI engineering, cybersecurity, cloud computing, data management, product development and AI governance.

India’s ability to retrain its workforce will be critical to ensuring that workers can move from declining roles into emerging occupations.

AI May Change Jobs More Than It Removes Them

The latest evidence suggests that the immediate future is unlikely to be simply “AI versus workers.”

Instead, companies are increasingly using AI to change how workers perform their jobs.

Some repetitive roles will disappear, new positions will emerge and many existing jobs will be redesigned around AI-assisted workflows.

For India, this could mean a gradual movement away from a labour-arbitrage economy toward one based increasingly on technology expertise and business innovation.

The challenge will be ensuring that the transition creates enough new opportunities for workers whose traditional jobs become less valuable.

As artificial intelligence continues to spread across customer service, IT, finance and other outsourced functions, India’s competitive advantage may ultimately depend not on having the cheapest workforce, but on having a workforce capable of working effectively alongside increasingly powerful AI systems.