5 minBusiness
AI adoption has not slowed offshore call center hiring, data shows
Despite widespread adoption of AI in customer service, employment in offshore call centers has continued to grow, with the Philippines seeing a near doubling of jobs since 2016. Economists point to falling costs and rising demand as key drivers.
Offshore call center employment continues to expand even as U.S. companies adopt artificial intelligence tools designed to automate customer service tasks, according to data cited by Apollo chief economist Torsten Slok. Employment in Philippine call centers has risen every year since 2016, nearly doubling to 2 million workers over the decade, based on figures from the IT & Business Process Association of the Philippines.
Slok noted in a recent blog post that unemployment rates in the Philippines fell from about 9% in 2021 to roughly 5% by mid-2026, while India saw a decline from around 7% to 6% over the same period. He argued that if AI were displacing white-collar work at scale, the effects would appear first in these two countries, where business process outsourcing accounts for a significant share of employment. Instead, the labor markets there have tightened.
The trend highlights a contradiction: customer service roles are considered highly susceptible to automation, yet demand for human agents remains strong. The Brookings Institution has estimated that 86% of customer service representative tasks carry high automation potential. Offshore call center jobs began expanding in the late 1990s and early 2000s as a cost-cutting measure, and the Philippines surpassed India as the largest call center employer about 15 years ago.
Wage differences remain substantial. Filipino call center workers earn between 15,000 and over 120,000 Philippine pesos per month, roughly $243 to $1,948, while the average monthly wage for U.S. call center workers is about $2,866, according to Indeed. The lower cost of overseas labor has made offshoring an enduring strategy for American companies.
Slok attributes the continued hiring to Jevons paradox, an economic observation from 1865 by William Stanley Jevons. The invention of the Watt steam engine made coal more efficient, but consumption rose rather than fell as energy became cheaper. Slok argues a similar dynamic is at play with AI: as the technology makes call center work cheaper and faster, companies purchase more of it, not less.
“Lower cost per interaction does not mean fewer interactions,” Slok wrote. “It means more customers served, more channels opened and more markets worth reaching. The technology that was supposed to shrink the industry is fueling its expansion.”
Evidence from other professions supports the idea that automation does not necessarily eliminate jobs. A decade ago, AI pioneer Geoffrey Hinton predicted radiology would eventually be automated. Instead, the number of radiologists in the U.S. has increased by 10% over the past decade, according to Christoph Herpfer, an economist at the University of Virginia’s Darden School of Business. “We actually have a huge shortage of radiologists. So the exact opposite of this prediction has happened,” he said.
Labor economists point to productivity gains as a reason for sustained demand. A 2023 study led by Erik Brynjolfsson of the Stanford Digital Economy Lab found that an AI-based conversational assistant increased productivity by an average of 14% per hour among more than 5,000 customer support agents. Earlier research by the same economist showed that an AI feature translating eBay listings boosted international exports by 17.5%.
Emma Harrington, an economics professor at the University of Virginia, sees parallels in today’s AI boom. “We can trade labor more easily across countries when language can be traded more seamlessly,” she said.
Other experts note that AI still struggles with complex problems and that human agents remain necessary for certain interactions. Benjamin Shestakofsky, a sociologist at Cornell University, said AI may not be sufficiently trained to navigate nuanced customer issues, and workers can experience cognitive overload when case loads increase. Some companies also deliberately maintain human customer service teams as part of their brand identity, he added.
