Offshoring in the Age of AI: A Theoretical Investigation

Abstract

Organizations operating in the AI space present themselves as key drivers of innovation, transforming industries such as healthcare, finance, and transportation. However, a significant and often underappreciated factor behind their rapid growth is the strategic use of offshored labor. This practice allows companies to access cost-effective talent pools, increase efficiency, and scale operations. As organizations continue to “offshore” many of their operations across national boundaries, they also reconfigure their relationship with their workforce. In this paper, we examine the impact of offshoring on the employer-employee contract, primarily through the lens of the exit-voice argument proposed by the economist Alfred Hirschman in 1970. Our contention is that offshoring reconfigures the employer-employee relationship, replacing earlier psychological contracts with an increasingly transactional character. We also present a framework of new HR imperatives that confront organizations and employees in the post-offshoring age, and discuss the ethical challenges facing organizational theorists, who must represent this tricky debate fairly in their research and the classroom without taking recourse to ideological formulations which conflate corporate welfare and social welfare.