AI replacement anxiety impacts IT outsourcing companies, with domestic enterprises setting up "Lobster Project Teams," making India and the Philippines major disaster zones

Earlier, a rumor that "NetEase plans to use AI to lay off all outsourced employees" sparked anxiety in the industry. Although NetEase (9999) has officially denied it, subsequent posts on social media detailing "sending away a hundred people in a day" and "70% layoffs in one group" still attracted a lot of attention. The reason this incident shook the industry is that it precisely hit the collective anxiety over AI replacement. Chinese internet companies are rushing to establish "Lobster Project Teams" to replace repetitive jobs with AI, with some employees stating that "all execution-type jobs are doomed." In India, shares of IT outsourcing companies have faced sell-offs; meanwhile, in the Philippines, the International Labour Organization estimates that over a quarter of workers are facing the impact of AI. Scholars warn that companies are shifting from seeking "cheaper labor" to "cheaper AI," a trend that may exacerbate social inequality, impacting individuals and nations alike, necessitating government intervention through policy and skills training. Game Companies: Execution-type Jobs May Be Doomed Li Jinglian, a sales manager at a game company in Guangzhou, told reporters that the company has established a Lobster Project Team. "As far as I know, not only game companies but almost all internet-related enterprises have set up Lobster Project Teams. Once a company successfully runs a project, it is estimated that a wave of layoffs will follow; not just outsourced employees, but even execution-type jobs will be doomed." In fact, AI is developing rapidly, becoming increasingly powerful, and is already quite common in internet companies represented by gaming. In its earlier performance report, NetEase mentioned key layouts in AI-native development pipelines and AI-native gameplay, among other areas, with the AI-native development pipeline covering the entire production process, including original art, models, animations, audio, levels, and testing, with some segments seeing efficiency improvements of 300%. AI Drawing Maturity: Speed and Cost Advantages Lu Hongyan, chairman of Xiamen game company 37Games, bluntly stated that in terms of AI drawing, "the team will let AI replace outsourcing to complete some simpler, repetitive tasks, thereby reducing costs." He pointed out that the company has been using AI-related tools, especially in AI drawing, where the current AI tool technology is quite mature, offering advantages in both speed and cost. Indian IT Outsourcing Industry Severely Impacted China is just a microcosm; the global outsourcing industry seems to be facing the impact of AI technology. Take India as an example, where the IT outsourcing industry, once valued at $300 billion, is facing the shock brought by artificial intelligence. As early as the beginning of February, local tech stocks experienced an unprecedented sell-off, triggered by the launch of a new tool by AI company Anthropic, claiming it could automate key business processes such as legal, compliance, and data workflows, directly impacting the business models of labor-intensive industries. Over the past 35 years, India's software industry has created millions of white-collar jobs, giving rise to an ambitious and strong purchasing power new middle class. However, many tech companies have warned that IT services may disappear before 2030; for instance, Anthropic has warned that AI could eliminate 50% of entry-level white-collar jobs Philippines 25% of Workforce Affected The Philippines is another heavily impacted area. The latest research briefing from the International Labour Organization (ILO) estimates that approximately 12.7 million workers in the Philippines are at risk of being replaced by artificial intelligence to some extent, which accounts for over a quarter of the country's workforce, the highest proportion among ASEAN economies, with women at the core of this technological impact. The organization analyzes that the rate of women affected by artificial intelligence is twice that of men, especially among young, educated women in clerical, administrative, and service positions. The International Labour Organization warns that the risks of artificial intelligence are not gender-neutral; without targeted interventions, AI could exacerbate the existing inequalities faced by women and youth. Amidst the unease, some Indian IT giants are attempting to reassure the market, claiming that concerns are exaggerated. Keshav Murugesh, CEO of WNS under the Cognizant Group, stated that AI could create more job opportunities, and technology will create a business model different from today, providing suitable long-term opportunities for employees. Seeking "Cheaper AI" Not Cheaper Labor Assistant Professor Au Cheuk-ho of the Department of Applied Social Sciences at PolyU believes that digital technology is fundamentally changing the outsourcing decision-making model of businesses. He points out that traditional outsourcing is primarily based on labor cost considerations, with companies tending to outsource call center operations and other businesses to lower-wage countries like the Philippines and India, but these industries are currently facing existential crises. Companies are now more inclined to utilize AI to save labor costs, seeking "cheaper AI" rather than cheaper human labor. Au Cheuk-ho believes that AI is likely to exacerbate social inequality, which will manifest at both individual and national levels. At the individual level, those from privileged backgrounds are more likely to gain opportunities to learn AI. At the national level, countries reliant on industries like call centers are more susceptible to the impacts of AI and may fall further behind. Experts Advocate for Government to Strengthen Regulation and Training When asked about the impact of AI on labor rights, Au Cheuk-ho candidly stated that even before the emergence of AI, some companies had already adopted non-standard employment contracts to reduce costs, and new technologies would only stimulate companies to further cut costs. He suggests strengthening government regulation, providing technical training for unemployed individuals, and supporting industries that rely on human instincts, feelings, empathy, and creativity. He believes that the emergence of AI coincides with the rising discussion on ESG, and the government can use this opportunity to encourage companies to balance efficiency with sustainable development for the benefit of society