AI Is Reshaping Offshore Jobs, but Human Customer-Service Work Continues to Grow
The rapid expansion of artificial intelligence is changing the global outsourcing industry, but the expected disappearance of offshore customer-service jobs has not happened at the scale many predicted.
Fresh labour-market evidence suggests that companies are increasingly using AI to make offshore workers more productive rather than immediately replacing them. India and the Philippines, two of the world’s biggest destinations for outsourced services, continue to have substantial employment in customer support and business-process operations.
The development presents a more complicated picture of AI’s effect on employment: some routine tasks are becoming easier to automate, while lower costs and faster service can encourage companies to expand the amount of work they outsource.
Offshore Employment Defies Early AI Predictions
AI has long been expected to put pressure on call-centre and back-office employment because many of these jobs involve repetitive communication and information-processing tasks.
However, data highlighted by economist Torsten Slok show that call-centre employment in the Philippines nearly doubled between 2016 and 2025, reaching around 2 million workers.
Unemployment in both the Philippines and India also declined between 2021 and July 2026, suggesting that AI adoption has not yet produced broad employment destruction across these major outsourcing economies.
Why AI May Increase Demand
One explanation is that AI can reduce the cost of handling an individual customer interaction.
When businesses can serve customers more quickly and cheaply, they may choose to handle a larger number of customers rather than simply reduce their workforce.
This is sometimes described through the economic concept of Jevons’ paradox. Greater efficiency can reduce the cost of a service and, instead of shrinking total demand, cause consumption of that service to increase.
Applied to customer support, AI could allow companies to operate more service channels, respond to more customers and enter markets that were previously too expensive to serve.
Human Workers Still Matter
AI tools are becoming increasingly capable, but customer-service interactions can involve complicated situations that require judgement, empathy and contextual understanding.
Research on AI-assisted customer support has already shown that technology can increase worker productivity. A 2023 study involving more than 5,000 customer-support agents found that an AI conversational assistant increased productivity by an average of 14% per hour.
Rather than eliminating every employee, companies can therefore use AI as a support system that helps workers answer questions faster and manage larger workloads.
India’s Outsourcing Advantage Faces a Different Challenge
Although offshore employment remains resilient, India’s traditional outsourcing model is facing structural pressure.
The World Bank’s 2026 World Development Report found that online job postings across South Asia declined by 1.6% after ChatGPT’s launch, with the reduction more pronounced among multinational companies and firms integrated into global value chains.
The report warned that generative AI could gradually weaken some of the advantages that helped countries such as India and the Philippines build large export-oriented service industries.
Routine digital work is particularly exposed because companies can potentially automate it or move it between locations without the same dependence on large human workforces.
AI Is Changing Indian Job Requirements
India’s employment market is simultaneously showing signs of adaptation.
Indeed data reported this week showed that Indian job postings increased 1.2% in July, ending a three-month decline. Postings were also 8.3% higher than a year earlier.
At the same time, technology-related categories experienced declines over the preceding three months, including IT infrastructure and support, software development, data and analytics, and IT systems and solutions.
The changing pattern suggests that AI is not simply removing jobs. It is also changing what employers expect from workers.
AI Skills Are Spreading Beyond Technology
AI-related requirements are increasingly appearing in occupations that are not traditionally classified as technology jobs.
Indeed’s analysis found that around 6.6% of job titles tracked in India contained meaningful AI references during the March 2026 quarter. The proportion had doubled in one year and nearly quadrupled over two years.
Non-technology occupations accounted for 42% of these AI-related job titles, indicating that AI skills are becoming relevant across a much wider part of the economy.
This shift means employees in areas such as marketing, finance, customer service and operations may increasingly need to understand AI tools even when they are not AI specialists.
Global Capability Centres Become Important
Another major change is the growing role of Global Capability Centres (GCCs) in India’s employment market.
Recent industry reporting indicates that GCCs are increasingly hiring for specialised technology, business and AI positions, while traditional IT-services companies face a more complicated employment environment.
More than half of Indian GCCs surveyed for FY2026-27 reportedly expect to increase hiring, with roughly 1.5 lakh new roles projected across the coming financial year.
This could provide an alternative source of employment as conventional outsourcing models evolve.
AI Creates a Skills Gap
The biggest challenge may not be the disappearance of work itself but the mismatch between existing worker skills and the capabilities employers increasingly require.
AI-related roles are expanding, but experienced professionals capable of designing, deploying and managing advanced systems remain relatively scarce.
In India’s retail and consumer GCC sector, for example, the AI workforce more than doubled between 2022 and 2025, yet only around 320 professionals were reported to have at least eight years of AI experience.
The shortage suggests that reskilling and upskilling could become essential for workers seeking to remain competitive.
The Next Phase of Offshore Work
The future of India’s outsourcing industry is therefore unlikely to be a simple contest between humans and machines.
Instead, companies are likely to combine AI systems with human employees. Routine requests can increasingly be handled automatically, while workers concentrate on complicated cases, customer relationships, quality control, escalation management and tasks requiring judgement.
That model could allow Indian service providers to deliver more work without increasing headcount at the same rate.
What Workers Should Expect
For employees, the message is increasingly clear: learning how to work alongside AI may be more valuable than competing directly against it.
Workers with strong communication skills combined with technology knowledge could have an advantage as businesses redesign their operating models.
The transformation will not affect every occupation equally. Some repetitive roles may shrink, while new positions involving AI supervision, data management, cybersecurity, automation and specialised customer support could grow.
A More Complicated AI Employment Story
The latest evidence challenges the idea that AI adoption automatically produces mass unemployment in offshore service economies.
Customer-service employment continues to expand in major outsourcing markets even as companies rapidly deploy AI tools. At the same time, evidence from the World Bank and Indian job-market data shows that AI is beginning to alter hiring patterns, particularly for internationally connected businesses and routine digital roles.
The emerging picture is therefore one of job transformation rather than simple job destruction.
AI may eliminate some tasks, increase the productivity of others and create entirely new categories of work. For India, the long-term economic outcome will depend heavily on whether workers, companies and educational institutions can adapt quickly enough to the changing demand for skills.
