AI could supercharge offshoring

One of the tropes about artificial intelligence is that AI

won't take your job, but someone who knows how to use it
will.

There's another possibility, however: Someone who knows

how to use AI — and who's based abroad — will come for
your job.

AI-powered offshoring could pose a threat to workers in

heavyweight economies by making people in cheaper
markets more efficient and better able to take on higher-
skill jobs.

The double hit of AI superpowers plus low-cost labor could

mean that the types of roles at risk of being offshored shift
from repetitive tasks like data entry, which have
traditionally been gestured to as actions AI can replace, to
meatier work like prompt engineering, high-end customer
service, and marketing, industry experts told Business
Insider.

Andrew Yeung, a former product lead at Google and Meta,

predicted in May that overseas workers who get their AI
glow-up will someday take over numerous jobs.

"In a few years, every scrappy founder and high-powered

executive is going to have an army of offshore talent
equipped with AI tools that completely replace the need
for traditional engineers, designers, marketers, and
assistants," he wrote on X.

His thesis seems to be backed up by Sagar Khatri,

cofounder and CEO of Multiplier. The company's platform
lets employers hire workers from anywhere by automating
functions like payroll and labor law compliance. He told BI
that companies will face more pressure to go global — not
to boost sales, but to find the skilled workers they need.

Thanks to productivity gains from AI, a company in New

York might more easily hire accountants in the
Philippines, customer-success workers in Mexico, and
customer support teams in India, Khatri said.

"With AI, a customer support agent can do their job much

better," he said.

Everyone's getting schooled

Online learning is making it easier for workers abroad,

especially young ones in developing countries, to build
their skills, according to Jeff Maggioncalda, CEO of
Coursera.

He told BI that workers will increasingly face competition

from others overseas who are using technology to
automate and be more efficient.
And it's not just learning about AI, but learning from AI.
Maggioncalda said the technology can help workers in
emerging areas get up to speed faster and compete with
those who command higher salaries in developed
economies. For many workers, a big factor will be what he
calls "talent agility." Essentially, it's how fast workers can
learn new things to add value to business models.

"It sounds kind of crass, but that's what it's going to come
down to," Maggioncalda said.

He added that a worker in a low-cost region who might

have previously taken five years to become as effective as
someone in a more expensive job market can now do so far
sooner. The person overseas doesn't necessarily even have
to be better, Maggioncalda said.

The threat simply comes from "someone who matches you

but costs less," he said.

Maggioncalda added that it's easier to hire, fire, and move

workers in many developing markets. Many workers in
these markets, he said, are young and hungry to gain skills
that will help them build their careers. Then, you give
them AI.

"Now they have a tool that has a differentially positive

impact on their productivity compared to someone who's
at the higher end," he said. "The only other question is,
how fast is this going to happen?"

Based on Coursera's numbers, it could be soon. In 2023,

the company enrolled a person every minute in a Gen AI
class. In 2024, it's drawing four people every minute, he
said.

Fifty-two percent of enrollments in Coursera's Gen AI

classes are from emerging markets like India, Pakistan,
Brazil, Vietnam, and Egypt.

AI is also making it cheaper to bring lessons on AI and

other topics to people in languages other than English.
Two years ago, it cost Coursera $10,000 to translate a
course into another language. Now, with GenAI, the
company can do it for $20, Maggioncalda said.

The massive drop in cost has enabled Coursera to

translate 4,500 courses into 22 languages, he said.

"Everybody can now learn this stuff because language is

not a barrier anymore," Maggioncalda said.

AI can deliver the real answer

Multiplier's Khatri said AI is making it easier for a bigger

pool of workers in countries enjoying demographic
tailwinds to get trained to become software developers
and other lucrative roles. That's helpful, he said, for
companies operating in countries with aging populations
like the US, the UK, Japan, or Germany.

Khatri also said AI could make companies less hesitant to

look overseas to fill needs like customer service reps
because the technology can quickly serve up a "real
answer" that an agent can give a caller. That can make the
conversations shorter, which, in turn, reduces the risk that
customers will hang up feeling dissatisfied by how hard it
was to get the information they needed or because of
hurdles like language.

That's because even if AI provides the answer, "customers

still want to talk to a human being," he said.

Daron Acemoglu, an institute professor in the economics

department at the Massachusetts Institute of Technology,
told BI that AI could open up parts of the world where
language barriers might have kept regions from becoming
offshoring hotspots like India or the Philippines.

"Workers in Indonesia couldn't do some services because

they're not fluent in English. Perhaps with better AI
translators, they can do that," he said.

Acemoglu also warned that there is a danger of AI

becoming so good that it undercuts the need for offshore
workers.
"It has to be a sort of rather narrow path — that AI is good
enough to do the translation but not good enough to do
these pretty low-skilled tasks," Acemoglu said.

'This isn't the cotton gin'

Scott Vincent, CEO of Digital Futures, a UK company that

helps people of varied backgrounds land roles in tech, told
BI that the global trial of remote work brought by the
pandemic proved to companies that they don't need all
workers to be together to remain productive. As a result,
he said, more organizations are looking at lower-cost
locations to tap into workers.

Vincent said he's seen "a real acceleration" of offshoring

offerings across industries since the pandemic.

"It poses a significant threat to the labor market," he said.

The threat doesn't stop with workers in expensive markets

like the UK or the US getting undercut by someone in a
developing market, Vincent said. Offshoring can make it
harder for companies to produce home-grown talent that
can rise through the organization, he said.

"Generative AI impacts, or can replace, a lot of

foundational skills that are learned at the start of one's
career. So you've got this double whammy," Vincent said.
Many big companies, he said, see Gen AI as having two
horizons. One is the immediate impact on the workforce —
the sugar rush of productivity gains. But the other, more
consequential effect is what he sees as an "outflow of
human capital" due to AI's eventual ability to do much
more than it can now.

"It is an exponential trend in terms of the pace at which

it's moving," he said.

The time it took for earlier technologies — including

automation and robotics — to rejigger the labor market
was longer than what we're seeing with Gen AI, Vincent
said.

He expects companies' spending on overseas labor will

grow. Digital Futures examined spending from the top 100
publicly traded companies in the UK and found that, on
average, each spent about £750 million (about $951
million) a year on offshore offices. Vincent said that works
out to about 1.2 million jobs in the UK and about £16
billion in lost tax revenue.

But short-term gains overseas may not lead to long-term

jobs. Drew Cesario, who consults on revenue operations
and marketing systems and is the founder of Botanical
Grp, told BI that the fate of some offshore workers who
might work alongside AI is likely similar to that of the
minders who sat in self-driving taxis during testing phases.
"They are training themselves out of a job," he said.

Because of how many tasks AI can take on, Cesario

expects there will be widespread job displacement both
domestically and internationally.

"I would love to say that there isn't, but this isn't the
cotton gin," he said. "It is a general technology versus a
specific technology."

How you can use tech

Vincent said governments in developed economies and

businesses need to work together to deal with the coming
changes to the job market. Businesses that say they're
offshoring in part because they can't find the skilled labor
they require need to see improvements in education
systems to produce better-prepared workers, he said.

Governments, Vincent said, could consider regulating the

percentage of a company's workforce that can be offshore.

Coursera's Maggioncalda noted that if you buy a car from

another country, you often have to pay a tariff.

"Maybe if you pay wages to another country, you have to

pay a wage tariff," he said.

Maggioncalda said it could be a way to help even out the

cost of labor.
In the meantime, he said, workers need to consider how
they can "add real value in a world where more and more
pieces of your job get automated."

"What you need to be thinking about is, 'How can I use

technology to automate certain parts of my job?'
Maggioncalda said. "Because if you don't do it, someone
else is going to do it someplace else in the world."