As companies insource to AI, workers skill up or switch out

Outsourced jobs aren't moving overseas anymore; they're being absorbed by artificial intelligence.

Experts say that while AI revolutionises industries and displaces millions of jobs, bridging the skills gap is key not only for employers, but also for workers.

Research from Microsoft, released in July, provided a list of professions most affected by AI, detailing how much of each job Microsoft's LLM Copilot could successfully perform occupational tasks. The report found that Sales Representatives of Services were four times more likely to be replaced with AI, with Copilot able to perform 84 per cent of the tasks. Additionally, Copilot was able to perform 80 per cent of the Telephone Operators' duties. 

These astounding figures are a stark contrast from years past, and with efficiency set to increase year-over-year. In July, outsourcing giant Tata Consultancy Services announced a decision to cut over 12,000 jobs. The company cited skills matching as the reason for shedding two per cent of its workforce.

This year, job search platform Indeed reported that Canadian tech job postings, as of early August 2025, dropped 19 per cent compared to its early-2020 levels.

The effects of AI deployment have been felt in Canada, too. Two months ago, Rogers Communications announced it had ended a contract with a third-party call centre. Approximately 1,000 workers were laid off as the telecom giant moved towards "digital tools" for its customer-facing service operations.

From cheaper labour to AI labour

Lawrence Eta is a digital thought leader and the former Chief Technology Officer (CTO) of the City of Toronto under Mayor John Tory. He says the workforce is at a moment in time where it is evolving from outsourcing cheaper labour from other countries, to replacing humans with even cheaper AI "labour." For example, whereas previously a company would have to hire multiple people for shifts when providing round-the-clock service, AI can answer calls in digital centres without needing to take a break.

But this extends beyond call centres. Eta says software engineers in Canada, for example, are also having trouble finding jobs, including at the management level. If AI can automate 80 per cent of tasks, including management of those tasks themselves, companies might ask why there is a need for a hierarchical command.

Bailey Parnell is the Founder and CEO of the Centre for Digital Wellbeing. Through her work as an entrepreneur and speaker, she has gained experience consulting on digital lives, generative AI, and leadership in the future of work. She is an advocate for protecting human thinking and human jobs in the workforce. 

"Of course, humans are usually the biggest expense on a company's budget. But, humans, actually have to matter to you," says Parnell. "Companies actually have to have leaders that care about people that say 'can we retrain before we release?' Reskilling and upskilling is something that both companies and government should be investing in."

People before robots

Protecting the human-first workforce in the age of AI is not a new idea. Six years ago, McKinsey & Company published their findings on "lifelong employability" - the ability to continuously inspire workers to keep up with demand in the rapidly changing economy. That was back in 2019. The industry has shifted from AI replacing call centres to employing agentic AI to perform tasks typically handled by software engineers, accountants, and data entry personnel.

While some workers call for AI regulation, Eta says the technology is moving too fast to regulate. If rules were officially put into place, the technology moves too fast and it becomes obsolete.

"I'm always careful about the balance of innovation and regulation, but I think what there should be is guidelines about how do industries get created, so people can transition to other work."

As the CTO of Canada's most populous city, Eta's team implemented the Digital Infrastructure Strategic Framework within Toronto. The principles establish a base of putting people-first before technology. Eta says under the framework, when technology is implemented, the framework is designed for decision makers to ask Does it contribute to positive social, economic and environmental benefits. 

"Capitalism doesn't mean the organisation is going to take responsibility, necessarily, for retraining all those people. It may just say 'we're moving on.' I think that there is a bigger onus for us as individuals to [adapt]," he says. "For example, instead of having white collar jobs, do I now go into retrain in blue collar jobs."

As part of Microsoft's research from July, it included a list of the occupations that Copilot was not able to perform. Among the 40 listed, floor sander, foundry moulders, pile driver operators and rail track maintenance workers all received zero per cent coverage.

Parnell says it's essential for companies and governments to actively train a larger portion of the workforce to keep pace with AI advancements. "The digital literacy gap is only going only getting wider. How can we actually teach people to use this tool to make to augment themselves, not to replace themselves, but to actually be like a human, plus AI duo?"