Soakai has withdrawn from the squad and will miss the Air New Zealand Cup so he can have a shoulder reconstruction operation.
His rehabilitation is expected to take four to six months.
All going well, he should be available for the Highlanders' Super 14 campaign next year.
Otago coach Steve Martin described the loss as a huge blow.
"Alando is a top-class flanker and it leaves a big gap for us to fill," he said.
"But it has happened in the past and will continue to happen . . . so hopefully another young fellow will step up and a new star is born."
Back-up openside flanker South African Eben Joubert broke his finger during the Otago trial match and is unavailable for the match against Southland.
"We are a bit thin in terms of experience in that position," Martin said.
Southern's Carl Anderson and Harbour's Jason Kelly have been added to the squad.
Anderson will start at openside in the game against Southland at Tahuna Park tomorrow, with Kelly on the bench and Hoani Matenga on the blindside.
Highlanders No 8 Steven Setephano will captain the side for the match, with halfback Toby Morland assuming the vice-captain's duties.
"He has quite a bit of experience at club and representative level captaining sides and we are giving him an opportunity this weekend to lead our training squad.
"After that, we will just assess where we go in terms of the captaincy."
With Craig Newby heading off-shore, Otago has to develop a succession plan, Martin said.
Daniel Bowden will line up outside Morland at first five-eighth but Martin said back-up first five-eighth Chris Noakes and halfback Sean Romans could expect game time.
So, too, would No 8 Paul Grant.
"We are really pleased that in the 8, 9, 10 area there are some real contenders and experience."
Ben Smith gets an opportunity to stake his claim at fullback and will be joined in the back three by wingers Karne Hesketh and Lucky Mulipola.
Brett Mather and Dan Snee complete the back line.
The front row will be based around experienced Highlanders hooker Jason MacDonald.
Tighthead Ben Nolan is making his way back from a serious injury and Jeremy Aldworth is a fleet-footed player with the knack of scoring tries.
Lock Tom Donnelly will start from the bench, with Ross Kennedy and Seko Qaraniqio getting the starting berths.
Newby is still struggling with a neck injury.
Martin is hopeful he will be fit for the opening Air New Zealand Cup match against Southland in Invercargill on August 2.
