The AI Paradox: A Boom in Automation, a Surge in Overseas Labor

The notion that artificial intelligence (AI) will displace human workers and bring about a new era of unemployment has been a dominant narrative in recent years. However, this tale may be one-sided. In customer service roles, particularly those outsourced to countries like the Philippines and India, AI has not led to a decline in employment – but rather an increase.

According to data from the IT & Business Process Association of the Philippines, call center employment in the country has risen each year since 2016, nearly doubling to two million over the ten-year span. This growth is remarkable given that the unemployment rate in the Philippines has decreased from 9% to around 4% between 2021 and March 2026.

Economist Torsten Slok attributes this phenomenon to Jevons paradox – a centuries-old economic concept that suggests increased efficiency often leads to increased consumption rather than decreased. While AI makes tasks cheaper and faster, companies buy more of them, not less. This means the cost of professional work falls as AI boosts task efficiency, increasing demand for certain roles and ultimately expanding available jobs.

The Resurrection of Jevons Paradox

English economist William Stanley Jevons first observed this paradox in 1865. It has since been applied to the labor market in the age of AI. Some tech leaders have predicted that AI will replace white-collar workers, but Slok posits that AI boosts task efficiency, increasing demand for certain roles and expanding available jobs.

This paradox is not limited to customer service roles. A decade ago, Geoffrey Hinton declared radiology would one day no longer need to be performed by humans due to its potential to be automated. However, the number of radiologists has actually increased by 10% over the past decade.

The Future of Call Centers and Automation

Labor economists are already seeing evidence that AI increases the productivity of call center workers, bolstering demand for these roles. A study led by Erik Brynjolfsson found that an AI-based conversational assistant tool increased productivity by an average of 14% per hour for over 5,000 customer support agents.

This trend has significant implications for the global economy. With language translation becoming increasingly seamless, companies can trade labor more easily across countries. As Emma Harrington notes, “we can trade labor more easily across countries when language can be traded more seamlessly.”

Not all economists agree on the benefits of AI in call centers. Benjamin Shestakofsky argues that AI may not yet be sufficiently trained to navigate complex problems. Moreover, humans experience limitations in processing an increased case load – a phenomenon akin to “AI brain fry.” Some companies may also choose to seek out human customer service agents simply because of their brand.

The Human Touch

In an age where automation is increasingly prevalent, some companies are recognizing the value of human interactions. As Shestakofsky notes, even if AI becomes capable of dealing with complex issues, there will always be a demand for human customer service agents who can provide a more personalized experience.

The story of call center employment and AI is one of surprising resilience in the face of technological change. While some may see this as a cause for concern, it’s also an opportunity to reexamine our assumptions about the impact of automation on labor markets. As we move forward into a world where technology continues to evolve at breakneck speed, it’s essential that we pay attention to these trends and their implications for workers around the globe.

The AI paradox serves as a reminder that technological advancements are often more complex than they initially seem. Rather than a straightforward narrative of displacement or growth, we’re faced with a nuanced reality that requires us to think critically about the role of automation in shaping our economies.