The AI boom hasn’t stopped U.S. companies from hiring cheap offshore labor, and overseas call center employment is still skyrocketing

2026-05-18 · Source: Artificial Intelligence · Field: Business & Management — Human Resources & Workforce Development, Operations & Process Management, Economic Analysis & Policy · Depth: Fundamental Awareness, quick

Summary

Despite the widespread adoption of agentic AI, U.S. companies continue to expand their use of offshore labor for customer service, leading to a significant increase in overseas call center employment. Salesforce CEO Marc Benioff stated in September 2025 that the company reduced 4,000 customer service roles, integrating AI with the remaining 5,000 support workers. However, Apollo chief economist Torsten Slok's analysis, citing data from the IT & Business Process Association of the Philippines, reveals that call center employment in the Philippines nearly doubled to 2 million between 2016 and 2025. Furthermore, unemployment rates in the Philippines decreased from 9% to approximately 4% from 2021 to March 2026, indicating AI has not displaced these workers. India's unemployment remained steady at around 7%, with the Philippines having surpassed India as the largest call center employer about 15 years ago. This trend suggests that the cost-effectiveness of offshore labor can sometimes outweigh the operational expenses of AI tokens.

Key takeaway

For CTOs and VPs of Engineering evaluating AI integration for customer service, recognize that AI's efficiency gains may not reduce overall labor needs but rather expand service capacity, potentially increasing demand for cost-effective offshore human agents. Your strategy should account for the "Jevons Paradox" where increased efficiency in one area can drive up demand for related resources, necessitating a holistic cost-benefit analysis that includes both AI token costs and global labor markets.

Key insights

AI adoption has not curtailed offshore call center growth; instead, both are expanding due to cost efficiencies.

Principles

• Offshore labor costs can be lower than AI token expenses.
• Increased efficiency can lead to expanded service demand.

In practice

• Evaluate total cost of ownership for AI vs. offshore BPO.
• Consider demand elasticity when implementing AI for efficiency.

Topics

• Offshore Labor
• Call Center Employment
• AI Displacement
• Philippines Economy
• Business Process Outsourcing

Best for: CTO, VP of Engineering/Data, AI Product Manager, Executive, Director of AI/ML, Consultant

Related on AIssential

• OpenAI's FRONTIER might be the "JOB KILLER" we were waiting for — AI is shifting towards "labor as a service" through human emulation and agentic systems.
• Opinion | The Jevons Paradox and AI — Increased AI efficiency may paradoxically boost consumption and overall industry revenues despite falling token prices.
• Cheaper AI Does the Opposite of What You'd Expect — Cheaper AI inference drives increased consumption and integration, leading to better user experiences and higher demand.
• How Smart Organizations Will Use AI: Jevons Paradox & Workforce Impact — AI, like past efficiency gains, will likely increase demand for human work, not reduce it, due to Jevons Paradox.
• What AI Infographics say about the future of AI? — Massive AI investments are driving compute demand and new business formation, while AI's labor impact and regulatory challenges are emerging.
• HUGE: 4,000 Cisco Workers Just Got Replaced by AI - Your Job Could Be Next — Cisco's layoffs signal a strategic shift towards AI, prioritizing compute power over human capital for future growth.

Open in AIssential →

Editorial summary, takeaway, and curation by AIssential. Original article published by Artificial Intelligence.