I’ve worked with AI companies where their “AI” is mostly just outsourced to some human in a low wage country. Some small part was actual AI algorithms, so they weren’t completely lying to investors.
Setting up actual AI is expensive and time consuming, especially for some new startup. Often it involves creating large amounts of labeled data and even that might not be enough. There are so many uncertainties involved. It might only be possible to achieve 90% or even lower accuracy for a given problem with actual AI algorithms, so the quick and easy solution is to outsource.
I believe this practice is more common than most think.